Pound Sterling GBP Outlook Improves on UK Public Finance Figures

August 19, 2016 - Written by James Fuller

STORY LINK Pound Sterling GBP Outlook Improves on UK Public Finance Figures

GBP Gains on EUR, USD as Pound Exchange Rates Are Boosted by UK Data

The Pound Sterling (currency : GBP) pushed ahead versus both the euro (currency : EUR) and the US Dollar (currency : USD) in early trading today following the publication of official British data which showed that the government had managed to pay down a significant amount of its debt last month.

The data, published by the Office of National Statistics (ONS), revealed that, ‘public sector net borrowing (excluding public sector banks) decreased by £3.0 billion to £23.7 billion in the current financial year-to-date (April to July 2016), compared with the same period in 2015.’


The ONS report which accompanied the release qualified this by stating that,

‘Public sector net borrowing (excluding public sector banks) was in surplus by £1.0 billion in July 2016; a decrease in surplus of £0.2 billion compared with July 2015.’

Placing the figures in context, the ONS went on to strike a less go-ahead tone, asserting that,

‘Public sector net debt (excluding public sector banks) at the end of July 2016 was £1,604.2 billion, equivalent to 82.9% of gross domestic product (GDP); an increase of £35.3 billion compared with July 2015.’

Pound Sterling Exchange Rates Close to Week's Best Levels

The Pound gained as a result of the numbers, building on its positive performance since the middle part of the week which was fueled by relatively strong domestic labour market numbers and yesterday’s encouraging UK Retail Sales data, sending the GBP USD exchange rate up to an intraday high of 1.3163 and GBP EUR up to 1.1615.

GDP Forecasts Could Limit Pound to Euro, US Dollar Gains

However, doubters were quick to point out that July is invariably a good month for British public finance stats because of the higher than usual Corporation Tax revenues collected. The cynics also noted that the debt-to-GDP figures included in the reported were based on spurious GDP forecasts; the ONS explained -

‘This is the second successive month of debt falling on the year as a percentage of GDP and indicates that GDP is currently increasing (year-on-year) faster than net debt excluding public sector banks. However, care should be taken when inferring trends from only two months' data, especially given the provisional nature of centred GDP estimates for the latest month.’

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates Poun Forecasts