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Thursday 9th March 2017

Sterling remained under pressure ahead of the US open as underlying yield spreads remained negative for the UK currency.

Sterling remained under pressure ahead of the US open as underlying yield spreads remained negative for the UK currency. In the Chancellor’s budget, there was an upward revision to the 2017 GDP forecast to 2.0% from 1.4%, but forecasts for subsequent years were downgraded slightly. The 2016/17 budget deficit forecasts was lowered to £51.7bn from £68.2bn previously, although this primarily reflected one-off factors and medium-term estimates were only slightly lower.

Although the near-term forecasts boosted sentiment, there was less confidence surrounding the longer-term prospects and no net stimulus from the statement. Sterling gained some initial support, but was unable to sustain the move with a cap below 1.2200 as most attention focussed on the dollar. The Euro also held above the 0.8650 level as German yields moved higher. The RICS house-price index was unchanged at 24% in the latest survey with Sterling little changed on Thursday.

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