Budget brings currency exchange benefit for sterling

Pressure on the currency exchange rate for the pound has been alleviated for now by the Budget announcement.

Chancellor George Osborne announced the emergency Budget yesterday (June 22nd).

A range of austerity measures were revealed, including cuts to child tax benefits and an increase in VAT to 20 per cent.

Sterling reflected the news as the markets were reassured that the UK was taking action to reduce its public spending deficit.

The pound rose to $1.48 against the US dollar this morning at 08:15 BST.

Ian Stannard, senior currency strategist at BNP Paribas, told Reuters: "The market has taken the view that the Budget is tough enough to address the UK's fiscal position and sterling has rebounded as it should help keep the ratings agencies at bay."

However, Mr Stannard added: "Longer-term there are still concerns about the negative implications on growth and I think sterling rallies will be fairly limited from here."

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Posted by Eleanor Ward