LONDON: Sterling was steady at $1.2550 and at 89.90 pence against the euro on Wednesday, a day after hitting three-week highs against both currencies, unmoved by Chancellor Rishi Sunak's announcement of his plans to revive the economy.
In an afternoon speech, the British finance minister said the government would pay bonuses to employers to bring workers back to their jobs from the state's coronavirus emergency furlough scheme. He also said the government would cut value-added tax (VAT) on spending at hotels, restaurants and tourist attractions and subsidise temporary discounts on eating out to boost demand for services hardest-hit by the Covid-19 lockdown.
"Sterling's unfazed reaction to Sunak's fiscal stimulus measures is in part due to the rally seen in the pound during yesterday's session, with programmes such as the Kickstart Scheme and Green Homes Grant already being public knowledge," said Simon Harvey, currency analyst at broker Monex Europe.
"Additionally, today's measures have an unknown impact on the UK economy and whether they will be sufficient to rejuvenate a battered hospitality and retail sector," he said.
"Namely, will businesses pass on the VAT tax cut to consumers to promote demand or use it to repair balance sheets, and is a £10 discount enough to encourage consumers to head out and face the risks of the virus?"