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Pound Falls on Brexit Budget Report; Turkish Lira Recovers


Tuesday, 8 October 2019 15:44 WIB

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The British pound headed lower again in early trade on Tuesday after a warning that a Hard Brexit could deliver a 100-billion pound blow to public finances.

A report by the Institute for Fiscal Studies think-tank concluded that the budget deficit could rise to 4 percent of gross domestic product if the U.K. leaves the European Union without a transitional agreement, as Prime Minister Boris Johnson is currently threatening to do. There is little sign of the EU accepting the U.K.’s latest proposals on changes to the existing Withdrawal Agreement in time for a new agreement to be finalized at next week’s summit.

Johnson’s finance chief Sajid Javid has already announced large increases in public spending to cushion the economy in the event of a Brexit shock, leaving the government no room for any additional budget shortfalls if it is to stick to a fiscal rule that says public debt must fall as a proportion of GDP next year.

Sterling was also hit by a report from the British Retail Consortium showing a 1.3 drop in retail sales in September, down from a 0.7% increase last year.

By 3:35 AM ET (07:35 GMT), GBP/USD was down 0.1% at $1.2279, having earlier hit a one-month low of $1.2269. Sterling was also down 0.2% against the euro at 1.1180, having hit a four-week low of 1.1175.

The dollar index, which measures the greenback against a basket of developed-market currencies, was little changed from late Thursday at 98.610.

Source : Investing.com


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