By David Schutz, THE TAKEAWAY: UK public finances, public sector borrowing higher than expected -> Cable stunts gains intraday Higher than expected public borrowing numbers from the UK failed to meaningfully affect the British Pound today, despite fundamental fears that the UK’s massive budget deficit may overshoot itself. Public sector net borrowing rose GBP 15.9bln in March as opposed to the expected 14.2bln. and the revised previous 9.9bln. The public sector net borrowing figure represents t he amount of new debt held by the UK government . In the long run, the government must balance the public sector account in order to sustain the economy . If the UK spends more than what it earns, it must finance this budg et deficit with an increase in net b orrowing . Growth in b orrowing is considered currency- bearish , because budget deficits are generally detrimental to the economy. March’s public finance figures suggest that the trend in the UK's fiscal position continues to worsen. Cable weakened intraday; however, the Pound’s overall trend remains bullish on the back of recent solid jobs data and a more hawkish outlook from the Bank of England.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.