Aug 29 (Reuters) – Sterling hit a one-month high versus the euro after inflation data from Germany and Spain led investors to increase their bets on European Central Bank interest rate cuts.
The pound was up 0.25% to 84.05 pence per euro, after hitting 84.00, its strongest since July 25.
It was roughly unchanged versus the dollar at $1.3190, having climbed to its highest since March 22 at $1.3269 on Tuesday. It was also on track for a 3.2% rise in August, its biggest monthly gain since November 2023.
UK finance minister Rachel Reeves’ first budget at the end of October is in focus.
Citi’s economists expect a revenue-raising package of around 20 billion pounds ($26 billion) overall, which should weigh on growth through next year.
“However, this (20 billion pounds) may not represent fiscal tightening since she will be using the money to address the real-terms cut in public spending under the previous Conservative government,” said Chris Turner, head of forex strategy at ING.
“For sterling, that may mean this is a fiscally neutral budget and one that could see the pound continue to outperform,” he added.
($1 = 0.7582 pounds)
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Reporting by Stefano Rebaudo; Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
