Pound Rallies after ‘Tigger-Like’ Hammond’s First Spring Statement
After Philip Hammond’s Spring Statement, the pound immediately began trending higher against the US dollar, euro, Japanese yen, Australian dollar, and Canadian dollar, as well as other major currencies.
Hammond said that he was at his ‘most positively Tigger-like today’ as he delivered his statement detailing the UK’s current economic position. However, being a fan of Winnie the Pooh via the films which my children like to watch, I would suggest that Mr. Hammond was actually nothing like the much loved anthropomorphic tiger created by AA Milne as he delivered his uncharacteristically upbeat message to the House of Commons.
Hammond commented that the UK economy has grown every year since 2010, and that the manufacturing sector was enjoying its longest prolonged period of expansion for 50 years.
On the labour market, Hammond stated: ‘Our remarkable jobs story is expected to continue.’ He also stated that he believed inflation would fall back to target within the next 12 months, so that real wage growth would be positive by the first quarter of 2018/2019.
When it came to economic growth, Hammond said: ‘Forecasts are there to be beaten, we did it in 2017.’ The forecast for growth in 2018 is up from 1.4% to 1.5%, while 2019 and 2020 remain unchanged at 1.3%. However, 2021 and 2022 were both downgraded from 1.5% to 1.4% and 1.6% to 1.5% respectively.
Hammond announced that in this year’s Budget, he would set the spending path from 2020 and beyond with a review in 2019. He also announced that improvements in public finances means he may be able to increase public spending as soon as the autumn. In his closing remarks, he said that he wanted the UK to be a force for good and a country British citizens were proud of.
Interbank session highs following the Spring Forecast:
GBP/EUR – 1.1292
GBP/USD – 1.3970