Sterling gains versus euro on UK Chancellor comments as he raises UK growth forecast

Posted On 26 Nov 2015

Sterling gained versus the euro on Wednesday after UK Chancellor of the Exchequer George Osborne increased the government’s forecast for growth in the United Kingdom next year.

Osborne’s comments supported market expectations that the Bank of England’s monetary policy will diverge with the European Central Bank, which is widely predicted to boost stimulus next week. ECB policy makers, due to meet December 3, are considering options such as two-tiered bank charges and broader bond purchases as they seek to fight low inflation in the Euro zone.

Sterling gained versus most of its 16 major peers. The U.K. economy will grow by 2.4 percent this year and in 2016, Osborne said on Wednesday as he set out his spending priorities for the next five years. The forecasts, by the Office for Budget Responsibility, compare to July growth predictions of 2.4 percent this year and 2.3 percent next.

The pound appreciated 0.4 percent to 70.31 pence per euro on Wednesday and consolidated near these levels early on Thursday. Against the dollar, sterling was little changed at $1.5086. Earlier this week it dropped to $1.5054, the lowest since November 9.

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