The pound is getting a pounding and extends its losses below 1.54. The new low is 1.5350. The pair traded earlier between 1.54 and 1.5450. The drop began before the speech, but the pound cannot really recover afterwards.
The fall comes on the background of the Annual Budget Release in Westminster. The Chancellor of the Exchequer George Osborne is presenting the budget in the House of Commons. The details emerging from the session are not earth shattering and part of the sell-off is related to the dollar’s strength rather than the anything budget related.
Some points from the budget presentation:
- Corporate tax will eventually be cut to 18% in 2020.
- A surplus is expected in 2019/2020.
- Welfare state is unsustainable.
- Cuts worth 37.5 billion pounds are expected for the current parliament.
- GDP is expected to rise by 2.4% in 2015, very similar to the previous forecast.
Part of the negative impact comes from the Greek crisis. An exit of Greece from the euro zone would eventually hurt the UK economy as well.
Here is how it looks on the chart:
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