Sterling Holds Its Ground In Spite Of Gloomy UK Autumn Statement

Published: Wednesday, 5 December 2012 18:00 BST - Written by John Cameron

STORY LINK Sterling Holds Its Ground In Spite Of Gloomy UK Autumn Statement

The Pound has held up relatively well during this afternoon’s trading session in spite of a gloomy Autumn statement from UK Chancellor George Osborne earlier. The Chancellor’s speech to the British parliament revealed that austerity measures will now be extended until 2018 due to the ruling coalition government’s failure to hit its own deficit-reduction targets. Osborne played to the markets a little and launched a dig at the opposition Labour party when he described any potential U-turn in policy as a ‘disaster’ for Britain’s economy. Osborne went on to significantly downgrade the government’s growth forecasts for the next few years. In spite of this, Sterling has gained a small amount against the euro on the day, to trade up to 1.2315. The Pound has also more or less held its ground against the US Dollar, meaning that the GBP USD exchange rate remains within a whisker of 1.6100.

The Sterling’s small increment in value against the single currency has been added to by a disappointing set of whole of eurozone Retail Sales data this morning. The shop sales figures for October showed an annualised decrease of some 3.6% against expectations of a contraction of 0.8%. The news had the additional effect of causing the EUR USD exchange rate to dip by 0.25% on the day; the pair currently sits at 1.3067.

Elsewhere, the latest ADP Employment Change data showed at slightly below the expected 125,000 in the US this afternoon. However, October’s US Factory Orders figures, released at the same time, showed at 0.8% when a 0.0% print had been expected. The net effect has been limited Dollar strength this afternoon.

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