UK Pound Gets a Boost, Even with Bigger Deficit

Even though the UK pound saw a bigger than expected deficit, the UK pound is getting a boost today. Sterling is higher as some observers think that the latest developments will result in an end to the strict austerity measures, and help the United Kingdom start spending a little more to ease the current recession.

Right now, the UK pound is heading higher, even though risk appetite isn’t very apparent in the markets right now. Sterling is higher against its major counterparts, including the US dollar and the euro. David Cameron and George Osborne have been adamant that the deficit in the United Kingdom be reduced, but so far the deficit is growing.
Even with the austerity measures in place, the recession is draining tax receipts and leading to growth in the deficit. On top of that, some say that the austerity measures are holding back the economic recovery. There are hopes that this latest development will lead to a loosening of austerity measures, and help promote economic growth.
For now, the pound has the upper hand, and it is likely to maintain it against the euro. But there is an expectation that it could easily slip against the US dollar.
At 14:29 GMT EUR/GBP is down to 0.7997 from the open at 0.8029. GBP/USD is up to 1.5592 from the open at 1.5574.

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