Pound gains on US dollar dip with data showing largest UK surplus in 18 years


Pound gains on US dollar dip with data showing largest UK surplus in 18 years

Sterling made gains against both the US dollar and euro on Tuesday.

The pound was up against major currency peers (Dominic Lipinski/PA)
The pound was up against major currency peers (Dominic Lipinski/PA)

The pound made gains on Tuesday as the US dollar dipped as UK data showed the UK Government logged its largest July surplus in 18 years.

Sterling was firmly in positive territory, rising 0.5% against the US dollar to its highest level in a week and a half at 1.286.

The dollar was knocked after President Donald Trump took a swipe at the US Federal Reserve, expressing disapproval over the tightening of monetary policy with the central bank having continued to raise interest rates.

Against the euro, the pound climbed around 0.3% versus the euro to 1.116.

It comes after figures from the Office for National Statistics (ONS) show public sector net borrowing, excluding state-owned banks, was in surplus by £2 billion in July.

That was above economist expectations for a £1.1 billion surplus and was the largest for the month in 18 years, having been bolstered by receipts on self-assessed income tax that are traditionally higher in January and July.

Fiona Cincotta, senior market analyst at City Index said: “Total tax receipts are up an impressive 4.5%, indicating that the improvement in public sector finances could be thanks to permanent factors rather than temporary ones.

“This is some welcomed good news for the Chancellor before the Autumn budget and gives him a good amount of wiggle room for extra spending ahead of Brexit.

“With a promised rise in NHS spending and local authorities struggling, the improvement in public sector finances has come at the eleventh hour for Chancellor Hammond ahead of possible Brexit turmoil.”

The pound was trading near one and a half week highs against the US dollar (PA)

The FTSE 100 ended the day lower, down 0.3% or 25.56 points at 7,565.7 points.

Across Europe, the French CAC 40 and German DAX closed higher by 0.5% and 0.4%, respectively.

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Brent crude prices were up 0.8% at around 72.66 US dollars per barrel amid prospects of restricted oil supplies due to US sanctions on Iran.

In UK stocks, Persimmon shares rose 4p to 2,440p after the house builder posted a 13% leap in profits and said customer demand remained resilient despite a recent interest rate hike by the Bank of England.

Persimmon reported pre-tax profits of £516.3 million for the six months to June 30.

BHP Billiton shares stumbled 34.6p to 1,610.6p having reported a 37% drop in full year net profit, following a multibillion pound hit from a shale gas impairment charge.

Shares in online booking site Hostelworld slumped 15p to 277p after it said demand was dented by the recent World Cup tournament and European heatwave.

Hostelworld said it was keeping a “rigorous” control on costs to help offset some of the bookings woes.

Games Digital surged 4.05p to 31.6p despite the company saying that full year revenue would edge lower and profit would come under pressure, after being hit by its second hand video games business.

It is also working to renegotiate store leases with landlords, as retailers come under intense pressure from falling consumer spending and soaring costs.

The biggest risers on the FTSE 100 were Kingfisher up 6.7p to 276.9p, Ocado Group up 20.5p to 1,079.5p, Sage Group up 10p at 629.2p, and Morrison Supermarkets up 4.25p at 268.05p.

The biggest fallers on the FTSE 100 were British American Tobacco down 100p to 4,122.5p, Imperial Brands down 63p at 2,923.5p, BHP Billiton down 34.6p at 1,610.6p, and Hargreaves Lansdown down 41p at 2,160p.

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