Tuesday, 8 October 2019 15:44 WIB |
The British pound headed lower again in early trade on Tuesday after a warning that a Hard Brexit could deliver a 100-billion pound blow to public finances.
A report by the Institute for Fiscal Studies think-tank concluded that the budget deficit could rise to 4 percent of gross domestic product if the U.K. leaves the European Union without a transitional agreement, as Prime Minister Boris Johnson is currently threatening to do. There is little sign of the EU accepting the U.K.™s latest proposals on changes to the existing Withdrawal Agreement in time for a new agreement to be finalized at next week™s summit.
Johnson™s finance chief Sajid Javid has already announced large increases in public spending to cushion the economy in the event of a Brexit shock, leaving the government no room for any additional budget shortfalls if it is to stick to a fiscal rule that says public debt must fall as a proportion of GDP next year.
Sterling was also hit by a report from the British Retail Consortium showing a 1.3 drop in retail sales in September, down from a 0.7% increase last year.
By 3:35 AM ET (07:35 GMT), GBP/USD was down 0.1% at $1.2279, having earlier hit a one-month low of $1.2269. Sterling was also down 0.2% against the euro at 1.1180, having hit a four-week low of 1.1175.
The dollar index, which measures the greenback against a basket of developed-market currencies, was little changed from late Thursday at 98.610.
Source : Investing.com