The Pound made gains against the Euro and the Dollar yesterday as UK’s Finance Minister George Osborne delivered his first budget to parliament. Osborne slashed the government’s borrowing projections and is determined to reduce the deficit to 1.1% of GDP by 2015/16, while the current deficit is 11% of GDP. In addition to slashing government spending, the budget announces that VAT sales tax would increase and a new 2 billion pound levy will be added on banks in efforts to eliminate its deficit in five years.
The Dollar declined against the Pound while making small gains against the Euro following concerns about the funding needs of European banks. Domestically, the National Association of Realtors reported a fall in US home sales to -2.2% in May from its previous +7.6% in April. The Richmond Fed manufacturing index showed a drop of 3 points from last May; sales revenues index in May fell from 8 to 5; and June data showed retail sales dropped to -1 from 0 in May.
The Euro declined against the Pound while declining against the Dollar after concerns over Eurozone debt worries resurfaced. The French bank Credit Agricole adjusted its profit expectations from Greek‘s Emporiki Bank and said it will take a 400 million euro ($536.7 million) writedown as Greece struggles to tackle its debt load. Additionally, Moody’s Investor Services cut two Greek government-sponsored asset-backed securities. On other news, The Munich-based IFO reported that German business climate index rose in June to 101.8 from 101.5 in May, its highest level since May of 2008.
Data released 23rd June
UK 09.30 BoE Minutes of June 9th-10th MPC Meeting
UK 11.00 CBI Distributive Trades Survey (June)
US 15.00 New Home Sales (May)
US 19.15 FOMC Rate Announcement
lets hope the pound continues to get stronger against the dollar