GBP/USD in at Session Highs as Autumn Statement Strikes Optimistc Tone
- OBR raises UK growth forecasts in 2015 and 2016.
- Long-term budget forecasts show surplus in 2018/19.
- See the DailyFX GBP Economic Calendar for the rest of the week.
The British Pound was trading near its session highs just short of $1.5700 amid Chancellor of the Exchequer’s reading of the Autumn Statement. The biannual commentary on the state of economic affairs in the UK was markedly more upbeat than prior iterations, at least in terms of domestic prospects (Mr. Osborne was rather dour on the Euro-Zone and Japan).
Growth forecasts for the UK were nudged higher to 2.4% in 2015 and 2.2% in 2015, and the Office of Budget Responsibility projections for the UK budget to tip into surplus in 2018/19, after having reached a peak of £97.5B in 2013. Even though recent budget targets have been missed, the improved, longer-dated forecasts should sow confidence.
GBPUSD 1-minute Chart: December 3, 2014 Intraday
Charts Created using Marketscope – prepared by Christopher Vecchio
Perhaps the most surprising aspects of the Autumn Statement were the comments on the banking system: Mr. Osborne announced a series of tax allowances to be cut, aimed at increasing banks’ taxes by £4B over the next five years. GBPUSD traded as low as $1.5620 this morning, but has since rebounded to as high as $1.5698, and was last quoted at $1.5681.
--- Written by Christopher Vecchio, Currency Strategist
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