Pound Strengthens On U.K. Fiscal Stimulus Plan
The pound appreciated against its major rivals in the European
session on Thursday, as U.K. government announced £30 billion
stimulus package to shore up the economy hit hard by the
On Wednesday, the Chancellor of the Exchequer announced tax cuts
and extra spending measures to revive the labour market and
increase consumer spending.
The VAT will be cut to 5 percent from 20 percent for six months
to help hospitality and tourism sectors.
Under a bonus plan, Sunak announced a £1,000 bonus for companies
that retain previously furloughed workers until 2021. The cost of
the bonuses could be £9 billion if every furloughed worker returned
Sunak unveiled a stamp duty cut in England and Wales for this
financial year. The homebuyers will be exempted to pay stamp duty,
if purchases are less than £500,000 until March 31.
European stocks were higher as Chinese markets extended their
winning streak to the eight day on hopes of a faster recovery for
the world's second largest economy.
Official data showed that the country's month-on-month consumer
inflation rose for the first time in four months in June. Producer
prices fell for the fifth consecutive month but at a
The UK housing market showed signs of a recovery as buyer
demand, sales and fresh listing improved noticeably following the
lockdown related falls, according to the residential market survey
results published by the Royal Institution of Chartered
A net balance of 61 percent of survey respondents reported a
rise in buyer enquiries in June, which was a strong rebound from
-94 percent registered in May, data showed Thursday.
The pound climbed to 1.1882 against the franc, its highest level
since June 18. If the pound rises further, 1.22 is possibly seen as
its next resistance level.
The pound spiked up to more than a 3-week high of 1.2668 against
the dollar, after falling to 1.2598 at 5:00 pm ET. Next key
resistance for the pound is seen around the 1.29 area.
The pound hit more than a 3-week high of 135.92 against the yen,
up from Wednesday's closing value of 135.24. The pound is seen
facing resistance around the 137.00 level.
The pound firmed to a fresh 3-week high of 0.8946 against the
euro, compared to yesterday's closing value of 0.8984. The currency
is likely to locate resistance around the 0.88 level.
Data from Destatis showed that Germany's exports grew for the
first time since the coronavirus pandemic hit the economy in
Exports grew 9 percent month-on-month in May, reversing a 24
percent decline in April. Nonetheless, shipments were expected to
grow at a much faster pace of 13.8 percent. Looking ahead, Canada
housing starts for June are scheduled for release at 8:15 am
U.S. weekly jobless claims for the week ended July 4 and
wholesale inventories for May will be out in the New York
Sterling vs Yen (FX:GBPJPY)
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