UK Budget Reaches Surplus in July
THE TAKEAWAY: UK budget reaches surplus in July -> Net borrowing unexpectedly rises -> Sterling higher on anticipation for ECB action
The UK monthly budget surplus reached 1.2 billion Pounds in July; this was 3 billion lower than the surplus in July 2011, according to the Office for National Statistics. The lower surplus was partially due to 0.8% lower tax revenue in July, which included 19.3% less corporate taxes; government spending also rose 5.1%.
The UK government borrowed a total of 0.6 billion Pounds in July (excluding interventions), which dissapointed expectations for 2.2 billion Pounds of public sector repayments. The UK’s net borrowing for June was revised to 14.6 billion pounds, according to the Office for National Statistics.
The unexpected net borrowing had no significant effect on GBPUSD trading. Sterling is trading higher against the US Dollar following the release of RBA minutes and reports that Germany will support an ECB plan. The pair earlier passed the 3-month 1.5750 resistance, and further resistance could come in around 1.5800.
GBPUSD 15-minute: August 21, 2012
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