Pound Advances As European Shares Rise, U.K. Budget Deficit Narrows
April 25 2017 - 4:45AM
RTTF2
The pound gained ground against the other major counterparts in
the European session on Tuesday amid risk appetite on some upbeat
earnings results and M&A news, as well as data showing a
decline in U.K. budget deficit for the financial year 2016-17.
Data from the Office for National Statistics showed that the
British government limited its budget deficit for the financial
year 2016-17 almost within its targets and the figure hit the
lowest level seen since the financial crisis.
In the financial year ending March 2017, public sector net
borrowing decreased by GBP 20 billion to GBP 52.0 billion. This was
the lowest deficit since the financial year ending March 2008 and
slightly above the Office for Budget Responsibility's estimate of
GBP 51.7 billion.
European share rose, with some encouraging earnings and merger
and acquisition activity lifting sentiment. Receding political
worries over France after Emmanuel Macron's victory in the first
round of Presidential election also continued to buoy risk
sentiment.
The pound held steady against its major rivals in the Asian
session, with the exception of the yen.
The pound rose to 141.76 against the yen, from a 4-day low of
140.06 hit at 7:45 pm ET. The pound-yen pair is seen finding
resistance around the 143.00 region.
Data from the Bank of Japan showed that Japan's corporate
service prices rose 0.8 percent on year in March.
That was unchanged from the February reading and in line with
expectations.
The pound reversed from an early 1-week low of 0.8510 versus the
euro, rising to 0.8478. Further uptrend may take the pound to a
resistance around the 0.82 area.
In an interview with the Austrian newspaper Der Standard, the
European Central Bank policymaker Ewald Nowotny said that
uncertainty about the future measures of the Trump administration
is particularly worrying and the problems from Brexit may be
underestimated as of now, both posing political risks for the
European economy.
"One of our interlocutors in Washington told us that Trump and
his team did not expect to win," Nowotny said.
The pound bounced off to 1.2830 against the greenback and 1.2766
against the franc, from its early lows of 1.2775 and 1.2722,
respectively. The pound is poised to locate resistance around 1.32
against the greenback and 1.31 against the franc.
Looking ahead, U.S. S&P/Case-Shiller home price index and
Federal Housing Finance Agency's house price index for February,
new home sales for March and consumer confidence for April are due
in the New York session.
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