British Pound (GBP) Latest: GBP/USD Shrugs Off Dire UK Borrowing Data
GBP price, Brexit news and analysis:
- UK public sector borrowing in the first half of the current financial year was more than six times the figure a year earlier due to the economic cost of the coronavirus pandemic.
- Official data also showed that public-sector debt rose further above the £2 trillion level and reached its highest as a percentage of GDP since 1960.
- UK inflation in September rose to 0.5% from 0.2%.
- Nonetheless, GBP/USD held its ground as “risk-on” assets benefited from rising hopes that a US fiscal stimulus package can be agreed.
- The FTSE 100 index, though, is falling back.
GBP/USD edging up despite poor UK economic data
GBP/USD largely ignored a very poor set of UK borrowing, debt and inflation data early Wednesday, suggesting some continuing underlying vigor as “risk-on” assets benefited from rising hopes of a US fiscal stimulus package, and economic strength in China.
There are also hopes that US-China relations could improve if Joe Biden wins the US Presidential election on November 3.
GBP/USD Price Chart, One-Hour Timeframe (October 16-21, 2020)
Chart by IG (You can click on it for a larger image)
FTSE 100 falls back, Brexit talks still a focus
By contrast, the FTSE 100 index of the major London-listed stocks was weaker in early trading Wednesday and there was mixed news on possible trade deals. While the EU-UK negotiations on their relationship once the Brexit transition period ends on December 31 continue to show no signs of progress, the US and the UK have launched a new round of talks focused on goods and tariffs.
UK borrowing, debt and inflation all rise
Turning to the UK economy, the cost of the coronavirus pandemic was evident in a very poor set of borrowing, debt and inflation data released Wednesday before the UK markets opened. Government borrowing in the first half of the 2020/21 fiscal year was more than six times the level a year earlier due to the cost of supporting the UK economy during the coronavirus pandemic.
Public sector debt climbed further above £2 trillion to 103.5% of GDP, the highest debt/GDP ratio since 1960.
However, the potentially negative impact of the borrowing and debt data was offset by the news that UK inflation rose to 0.5% year/year in September, up from 0.2% in August.
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--- Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.