Pound Rises As U.K. Political Turmoil Slide
(RTTNews) - The British pound strengthened against other major currencies in the European session on Thursday, after plans to reduce welfare expenditures were abandoned by the government.
The British Prime Minister Keir Starmer said that Chancellor of the Exchequer Rachel Reeves, who is viewed by markets as a strong supporter of fiscal regulations, will remain in her position.
After the government announced an increase in assistance programs, Keir decided not to support Reeves until after the next elections.
The recovery indicates that investors are putting some of their concerns about the Labour Party's capacity to fulfill its own expenditure commitments behind them. Following opposition from some of Labour's own MPs, Prime Minister Starmer's administration on Wednesday put a halt to its planned reductions in disability benefits.
In the European trading today, the pound rose to 0.8629 against the euro and 1.3676 against the U.S. dollar, from early lows of 0.8655 and 1.3624, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.84 against the euro and 1.38 against the greenback.
Against the yen and the Swiss franc, the pound advanced to 196.71 and 1.0830 from early lows of 195.76 and 1.0783, respectively. The pound may test resistance around 199.00 against the yen and 1.10 against the franc.
Looking ahead, Canada and U.S. trade data for June, U.S. average hourly earnings data for June, U.S. weekly jobless claims data, U.S. S&P Global Composite PMI for June and U.S. Baker Hughes oil rig count data are slated for release in the New York session.
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