Latest news with #pound
Yahoo
2 hours ago
- Business
- Yahoo
Sterling holds on to gains, investors mull rise in borrowing
By Amanda Cooper LONDON (Reuters) -The pound steadied on Tuesday, consolidating after the previous day's rally, as investors took stock of data that showed UK government borrowing soared in June, a reminder of the fragility of Britain's public finances. Sterling, which rose 0.6% on Monday, its biggest one-day gain in a month, was last at $1.3493, showing little change on the day. It was also steady against the euro, which was at 86.7 pence. Britain borrowed more than expected in June as high inflation added to the government's debt costs, according to official data that is likely to add to speculation about the need for fresh tax increases later this year. Public sector net borrowing totalled 20.7 billion pounds ($27.9 billion) last month, the data showed. This compares with a forecast of 17.1 billion pounds for June from the Office for Budget Responsibility, the budget watchdog. "These overshot expectations yet again, a fact that should refocus minds on UK fiscal sustainability risks, especially after warnings by the ONS that the 20.7 billion pound figure recorded represents 'the second-highest June borrowing since monthly records began in 1993, after that of June 2020'," analysts at Monex said. "As we have noted previously, this is not a sterling positive dynamic, leaving risks to the pound tilted to the downside ahead of Thursday's PMI release," they said. The borrowing figures added to a sense among investors that finance minister Rachel Reeves may have to raise taxes again later this year to remain on track to meet her targets for fixing the public finances. A separate report on Tuesday showed grocery inflation in Britain rose to 5.2% in the four weeks to July 13, up from 4.7% in last month's report and the highest since January last year, heaping more pressure on UK households. Market researcher Worldpanel by Numerator, which published the report, said just under two-thirds of households say they are "very concerned" about the cost of their groceries, and are switching to supermarket own-label products. The numbers align with data last week that showed nationwide consumer price inflation picked up more than expected in June, also hitting the fastest pace since January 2024. The Bank of England is expected to cut rates by a quarter point next week and at least one more time before the end of the year.
Zawya
8 hours ago
- Business
- Zawya
Sterling holds on to gains, investors mull rise in borrowing
The pound steadied on Tuesday, consolidating after the previous day's rally, as investors took stock of data that showed UK government borrowing soared in June, a reminder of the fragility of Britain's public finances. Sterling, which rose 0.6% on Monday, its biggest one-day gain in a month, was last at $1.3493, showing little change on the day. It was also steady against the euro , which was at 86.7 pence. Britain borrowed more than expected in June as high inflation added to the government's debt costs, according to official data that is likely to add to speculation about the need for fresh tax increases later this year. Public sector net borrowing totalled 20.7 billion pounds ($27.9 billion) last month, the data showed. This compares with a forecast of 17.1 billion pounds for June from the Office for Budget Responsibility, the budget watchdog. "These overshot expectations yet again, a fact that should refocus minds on UK fiscal sustainability risks, especially after warnings by the ONS that the 20.7 billion pound figure recorded represents 'the second-highest June borrowing since monthly records began in 1993, after that of June 2020'," analysts at Monex said. "As we have noted previously, this is not a sterling positive dynamic, leaving risks to the pound tilted to the downside ahead of Thursday's PMI release," they said. The borrowing figures added to a sense among investors that finance minister Rachel Reeves may have to raise taxes again later this year to remain on track to meet her targets for fixing the public finances. A separate report on Tuesday showed grocery inflation in Britain rose to 5.2% in the four weeks to July 13, up from 4.7% in last month's report and the highest since January last year, heaping more pressure on UK households. Market researcher Worldpanel by Numerator, which published the report, said just under two-thirds of households say they are "very concerned" about the cost of their groceries, and are switching to supermarket own-label products. The numbers align with data last week that showed nationwide consumer price inflation picked up more than expected in June, also hitting the fastest pace since January 2024. The Bank of England is expected to cut rates by a quarter point next week and at least one more time before the end of the year.
Reuters
8 hours ago
- Business
- Reuters
Sterling holds on to gains, investors mull rise in borrowing
LONDON, July 22 (Reuters) - The pound steadied on Tuesday, consolidating after the previous day's rally, as investors took stock of data that showed UK government borrowing soared in June, a reminder of the fragility of Britain's public finances. Sterling , which rose 0.6% on Monday, its biggest one-day gain in a month, was last at $1.3493, showing little change on the day. It was also steady against the euro , which was at 86.7 pence. Britain borrowed more than expected in June as high inflation added to the government's debt costs, according to official data that is likely to add to speculation about the need for fresh tax increases later this year. Public sector net borrowing totalled 20.7 billion pounds ($27.9 billion) last month, the data showed. This compares with a forecast of 17.1 billion pounds for June from the Office for Budget Responsibility, the budget watchdog. "These overshot expectations yet again, a fact that should refocus minds on UK fiscal sustainability risks, especially after warnings by the ONS that the 20.7 billion pound figure recorded represents 'the second-highest June borrowing since monthly records began in 1993, after that of June 2020'," analysts at Monex said. "As we have noted previously, this is not a sterling positive dynamic, leaving risks to the pound tilted to the downside ahead of Thursday's PMI release," they said. The borrowing figures added to a sense among investors that finance minister Rachel Reeves may have to raise taxes again later this year to remain on track to meet her targets for fixing the public finances. A separate report on Tuesday showed grocery inflation in Britain rose to 5.2% in the four weeks to July 13, up from 4.7% in last month's report and the highest since January last year, heaping more pressure on UK households. Market researcher Worldpanel by Numerator, which published the report, said just under two-thirds of households say they are "very concerned" about the cost of their groceries, and are switching to supermarket own-label products. The numbers align with data last week that showed nationwide consumer price inflation picked up more than expected in June, also hitting the fastest pace since January 2024. The Bank of England is expected to cut rates by a quarter point next week and at least one more time before the end of the year.
Reuters
4 days ago
- Business
- Reuters
Pound mixed at end of busy data week, BoE policy top of mind for traders
LONDON, July 18 (Reuters) - The pound was set to finish the week down on the dollar and a fraction stronger against the euro as traders digested data that caused analysts to pare back expectations of near-term Bank of England easing and worry about longer-term economic prospects. Sterling was last up 0.27% on the day against the dollar at $1.3454, though set for a weekly fall of 0.3%, both in line with the dollar's moves against other European currencies. It was trading at 86.57 pence to the euro, softer on the day, but a whisker stronger on the week. Friday was quiet in terms of domestic British data after a busy week, which saw hotter than expected inflation numbers released on Wednesday and news of slowing wage growth on Thursday. The data caused analysts at Goldman Sachs, Citi and Bank of America, who had previously expected the Bank of England to cut interest rates in both August and September, to remove the September cut from their forecasts in notes published on Friday. "The labour market has been softening, pay growth is slowing and growth data remains weak. This is likely to warrant further cuts, and we continue to expect the next cut in August," BofA said. "But stronger-than-expected inflation and sizeable upward revisions to recent payroll falls show that the data is not weakening enough for the BoE to accelerate cuts." Markets are close to fully pricing a rate cut in August, and see one more as likely by year-end. But while a prospect of fewer BoE rate cuts would typically support the pound, its gains have been limited by the implications of higher borrowing costs for Britain's public finances. "The outlook for the UK appears much weaker than other major economies," said currency analysts at Monex Europe. "We expect these building headwinds to weigh on the pound in the coming weeks."
Reuters
5 days ago
- Business
- Reuters
Sterling strengthens against euro after job market data
LONDON, July 17 (Reuters) - The pound strengthened against the euro on Thursday, after data showed that a cooling in the British labour market, which had alarmed some policymakers, now appears less acute than the previous report had suggested. The euro was last down 0.22% on the pound at 86.52 pence, as the data reduced pressure on the Bank of England to accelerate the pace of its rate cuts, supporting sterling. The labour market numbers presented a mixed picture. Annual wage growth in the three months to May was 5.0%, its lowest since the second quarter of 2022, but was still slightly higher than the 4.9% median forecast from economists in a Reuters poll. In addition, data from the previous month showing a dramatic 109,000 drop in the number of employees on company payrolls in May was revised to show just a 25,000 decline. "Today's labour market report continues to paint a picture of a loosening jobs market. That said, the labour market picture looks better than it did last month," said Sanjay Raja, Deutsche Bank's chief UK economist, in emailed comments. In combination with Wednesday's hotter than expected British inflation data, the jobs numbers leave the Bank of England in a somewhat tricky situation, balancing sticky inflation, and slowing, if not collapsing employment. However, for this year, "this takes some of the pressure off the Bank of England to cut rates more quickly", said James Smith, developed markets economist, UK, at ING in a note. As well as the euro, the pound was stronger on most other currencies including the yen, and Swiss franc. , Versus the dollar, however the pound was down 0.15% at $1.1340, as the U.S. currency strengthened across the board, recovering from its Wednesday selloff. On Wednesday, media reports saying U.S. President Donald Trump was likely to soon fire Federal Reserve Chair Jerome Powell sparked a drop in the dollar. Trump said later that day he was not planning on firing Powell, but kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates.
