During the presentation of the Spring Budget, the Treasury Chancellor of the United Kingdom, Rachel Reeves, said that an investment of 3,250 million pounds sterling will be anticipated to reform public services, according to Reuters.
Key points
“Daily public spending will increase 1.2% per year in real terms, compared to 1.3% in October.”
“The daily expenditure in 2029-30 will be 6,100 million sterling lower than planned in October.”
“We will increase capital spending by an average of 2,000 million pounds sterling a year.”
“Planning reforms will permanently increase GDP by 0.2% in 2029/30.”
“Planning reforms will add 0.4% to GDP in 10 years.”
“The measures in general will increase the GDP of the United Kingdom by 0.6% in 10 years.”
“Growth reforms will generate 3.4 billion additional sterling pounds to support public services by 2029/30.”
“Our economy is expected to be larger at the end of the forecast period that predicted it in October.”
“The real available income of households will grow this year almost double the predicted rate in October.”
Market reaction
The GBP/USD remains in the lower half of its daily range while the markets evaluate the details of the spring budget. At the time of the publication, the low paper 0.3% in the day to 1,2905.
LIBRA ESTERLINA FAQS
The sterling pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most commercialized currency exchange unit (FX) in the world, representing 12% of all transactions, with an average of $ 630 billion a day, according to data from 2022. Its key commercial peers are GBP/USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The sterling pound is issued by the Bank of England (BOE).
The most important factor that influences the value of sterling pound is the monetary policy decided by the Bank of England. The Bank of England bases its decisions itself has achieved its main objective of “price stability”: a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, which makes access to credit for people and companies more expensive. This is generally positive for sterling pound, since higher interest rates make the United Kingdom a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing down. In this scenario, the Bank of England will consider lowering interest rates to reduce credit, so that companies will borrow more to invest in projects that generate growth.
Published data measure the health of the economy and can affect the value of sterling pound. Indicators such as GDP, manufacturing and services PMI and employment can influence the direction of the sterling pound.
Another important fact that is published and affects the pound sterling is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
