LONDON: The pound was one of the better performing currencies on Friday, drawing strength from the government’s budget and supported by expectations for the Bank of England to raise rates next week.
John Healey delivered his first budget as finance minister under Labour Prime Minister Andy Burnham on Wednesday. Investors had widely expected what some had termed a “do no harm budget” and Healey’s spending plans did not provide any surprises to move the pound or gilts strongly in either direction, or materially change the outlook for interest rates.
He said the headroom — the amount of extra spending or tax cuts the government can make under its own fiscal rules — stood at £15 billion (USD19.93 billion), in line with expectations from a Reuters poll, but below the £23.6 billion in March.
With that risk event out of the way, and expectations set for a rate rise from the BoE next week, sterling was up 0.4 percent on Friday at USD1.3429, making it the best-performing major currency of the day.
The pound is heading for a 1 percent gain against the dollar this month, its first monthly gain since August. It has fallen 0.6 percent against the dollar in 2026, handily outperforming the euro, which has fallen nearly 5 percent, and on a par with the yen , which is also down 0.6 percent against the US currency.
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