Britain’s Budget Cuts Won’t Strangle Economy, Pound Strengthens

The Great Britain pound rose against the U.S. dollar today after Fitch Ratings positively commented on Britain’s government efforts to curb the budget deficit; versus the Japanese yen the sterling performed not so well as the demand for the safety still supports the Japanese currency.
The U.K plans the levy on banks and increase of the sales tax in order to battle its record budget deficit. These measures should preserve the nation’s top credit rating without suppressing the economic recovery. George Osborne, the Chancellor of the Exchequer, predicted that growth would slow to 1.2 percent this year and 2.3 percent in the next.
It looks like Britain’s government strives to avoid most damaging budget cuts, giving hope that the nation’s economic recovery would retain its momentum to some degree. This outlook returned a bit of confidence in the U.K. currency, but it looks like a long way for Britain to return strength to its economy and currency.
GBP/USD traded at about 1.4816 today as of 19:33 GMT after opening at 1.4752. GBP/JPY declined to 134.03 from its opening price of 134.38.

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