The pound rose to a three-week high versus the euro as Chancellor of the Exchequer George Osborne announced forecasts for stronger U.K. growth as he outlined his end-of-year spending and tax plans in Parliament.
Sterling strengthened against all but two of its 16 major peers as Osborne said the economy will grow 2.4 percent in 2015, revised from 2.3 percent. Britain will borrow about 5 billion pounds ($7.9 billion) more in the current fiscal year than previously forecast in March, Osborne said, as he announced measures including changes to a tax on property sales. Data today showed services expanded in November faster than analysts estimated.
“Although the borrowing numbers have gone up, it’s not as much as the market was expecting,” said Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley in London. “Sterling is holding up as a result of that. These numbers look to be more encouraging.” While the medium-term “reaction is probably likely to be one of a sigh of relief,” longer-term “there’s still a lot of challenges and risks for sterling,” he said.