Thread: Pound leaps as OBR says finances better than expected

The pound leapt by more than two cents against the dollar after the Treasury's new Office for Budget Responsibility cut Britain's economic forecast but said that the public finances are in better shape than previously calculated.


By Edmund Conway, Economics Editor
Published: 9:10PM BST 14 Jun 2010


Sir Alan Budd chair of the Treasury's Office for Budget Responsibility. Photo: Geoff Pugh


Markets were cheered by the verdict from the OBR – the new independent monitor of official government forecasts and fiscal plans – that the Government's debt position is less parlous than was forecast in the Budget in March. The pound rose by 2¼ cents against the dollar to $1.4788 and strengthened against the euro, with shares in London also stronger.

The moves were described by traders as reflecting the fact that although the OBR downgraded the official Treasury growth forecasts and increased its assessment of the size of the underlying budget deficit, it did not uncover any Greek-style gaps in the public finances.



The OBR, whose forecasts will underpin next week's emergency Budget, pencilled in growth of 2.6pc for next year, compared with a Treasury forecast of 3.25pc; it also predicted growth of 2.8pc in the following two years, again below the Treasury's prediction. However, it said that overall Government borrowing will be £23bn lower than the Treasury's previous forecast over the coming five years – partly because of stronger tax receipts this year and partly because it has taken a more realistic view of the economy.
However, the structural budget deficit, which will persist even when full economic growth returns, was estimated to be higher than the Treasury previously forecast – some 8pc of gross domestic product this year, compared with 7.3pc according to the Budget.
Michael Saunders, economist at Citigroup, said: "To me the most interesting thing is that the deficit is a bit lower than we thought, though the structural position is still weak. The point about the actual deficit being lower is very important. The UK - provided we do the tough things in Budget - is able to get back to fiscal stability and is able to do it better than other countries."
The OBR forecasts prefigure a Budget almost certain to contain spending cuts and possible extra tax rises next week.

Budget 2010: Pound leaps as OBR says finances better than expected - Telegraph

Wrong. The pound leapt on the news that today , I divested myself of a lot of sterling travelers cheques after considering waiting until tomorrow in the hope that I might get a better rate. As soon as the deal was done the news hit the markets and shouts went up:

' Bangyai's cashed his cheques !! '

The effect on the pound was immediate.

Today's rate (Pound to Rp) is slightly better at 13,556. Still crap really and I don't see it getting much better for a while.

No it hasn't.
It took a pasting last week, had a bad morning today, and now is 50 pips up since midnight last night.

Originally Posted by the dogcatcher

No it hasn't.
It took a pasting last week, had a bad morning today, and now is 50 pips up since midnight last night.

I got 47.05 this morning at the Bangkok Bank, slightly up from last week. This news came in later in the day so I figure tomorrows rate might be a bit higher at about 47. 35.
Thats my ' 2 cents worth ' so in the end, nothing to get too excited about. Still any movement up is better than anything down. Luckily I didn't put all my eggs in one basket and still have some stirling left and a bundle of U.S dollars.

^ I think a lot of people even secretly belive that, hence the steady climb of gold.
£ will stay as low as the BoE can keep it.