Pound extends losses as Chancellor Reeves reveals budget

• This budget raises taxes by GBP40 billion
• We will maintain BOE’s 2% inflation target
• OBR says budget will boost long term growth
• Will balance budget in third year
• Confirms earlier reported rise in minimum wage
• Will ‘catalyze’ 70 billion pounds through new National Wealth Fund

Looking at the GDP forecasts changes from March:

• 2024: Up from 0.8% to 1.1%
• 2025: Up from 1.9% to 2.0%
• 2026: Down from 2.0% to 1.8%
• 2027: Down from 1.8% to 1.5%
• 2028: Down from 1.7% to 1.5%
• 2029: New forecast of 1.6%

For CPI changes from March:

• 2024: Up from 2.2% to 2.5%
• 2025: Up from 1.5% to 2.6%
• 2026: Up from 1.6% to 2.3%
• 2027: Up from 1.9% to 2.1%
• 2028: Up from 2.0% to 2.1%
• 2029: New forecast of 2.0%

The CPI forecasts are notably higher but the pound is at the lows of the day, down 77 pips to 1.2940. This is Labour’s first budget in 15 years.

This article was written by Adam Button at www.forexlive.com.