Sterling reaches a 6 week high against the US dollar

Sterling has pushed to a near 6 week high against the greenback to trade back above 1.33, a move now of just over 2% in just over a week.

The moves came following Chancellor Philip Hammond’s first budget in which a gloomy outlook was given for the UK’s future growth forecasts. Following the budget Conservative MP’s rallied around Philip Hammond, although the Labour party were quick to condemn the government saying the projections were the weakest in decades.

In his budget, Mr Hammond indicated that forecasts for the UK economy were for an expansion of just 1.4% a year by 2022 citing uncertainty surrounding Brexit as a main reason for falling productivity.

During the budget much of his focus was on the issue of affordable housing and the limited supply of affordable housing. This lead to a reduction in stamp duty for first time buyers purchasing properties up to £300,000.

To help those in London and other expensive areas, the first £300,000 of the cost of a £500,000 purchase by all first time buyers will be exempt from stamp duty, with the remaining £200,000 incurring 5%

Initially the market had little reaction to the budget, although sterling was to rally in the afternoon and overnight following the Federal Reserve minutes pushing the pound to a 6 week high against the US dollar. In the minutes the Fed, although still suggesting they will look to hike in December, the rest of the tone was fairly dovish, leading to a fall in value for the dollar.

With it being thanksgiving today and the US market being closed any dollar movements will be influenced by events elsewhere, this will include this mornings UK Gross Domestic Product (GDP) figures at 09:30.

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