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Budget: Pound soars as Jeremy Hunt says recession threat is over

One Euro and British pound coins are seen in this illustration taken, November 9, 2021. REUTERS/Dado Ruvic/Illustration
The pound has jumped against the euro after the Spring budget. Photo: Dado Ruvic/Reuters

The pound (GBPEUR=X) soared against the euro as chancellor Jeremy Hunt delivered his Spring budget.

Hunt announced a series of measures to try and boost UK economic growth as he said the recession threat is over.

Analysts were more optimistic around this budget, as a repeat of last September's volatility when then finance minister Kwasi Kwarteng announced uncosted spending plans, sending the pound to a record low, was not in the cards.

Read more: Budget 2023: Jeremy Hunt unveils spring statement as he says UK will avoid recession

The pound was up 1.2% against a weaker euro at €1.1461 as the chancellor revealed that the UK will not go into recession this year as the Office of Budget Responsibility (OBR) forecast that inflation will fall to 2.9%.

“Other factors are taking precedent but in any case, this budget is likely to be engineered to be pretty dull,” Rabobank’s Jane Foley said.

“Other events have stolen the headlines but this was never likely going to be a headline reaching budget anyway.”

The fall in inflation will be aided by the government's decision to freeze the Energy Price Guarantee, ensuring the typical household energy bills will remain at £2,500 a year.

Read more: Childcare, pensions, tax, benefits — the key takeaways from Jeremy Hunt's statement

"We doubt the budget today will spur a meaningful positive or negative reaction in the pound," said George Vessey, FX and macro strategist at Convera.

However, the pound (GBPUSD=X) edged lower against the dollar on Wednesday, but remained close to a one-month high.

The pound was down 0.6% against a broadly stronger dollar at $1.2074, having hit a one-month high of $1.2203 on Tuesday.

Read more: Budget 2023: UK will not enter recession, OBR forecasts

The drop in Credit Suisse (CS) shares triggered demand for the safe-haven dollar and away from high-beta currencies such as the pound.

Watch: Key points from Jeremy Hunt's Spring budget 2023

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