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The pound fell as much as 0.5 per cent to $1.2139 on Wednesday — its weakest level against the US dollar since January 17 — before modestly trimming its losses to trade 0.4 per cent lower as Chancellor Philip Hammond’s first and last spring budget failed to rally support for the UK currency.

“The Chancellor lived up to his reputation for fiscal conservatism…and is pressing ahead with a tough fiscal tightening,” Samuel Tombs, economist at Pantheon Macroeconomics said. Moreover, he noted that hopes that the Office of Budget responsibility would lift its growth outlook were misplaced.

While the OBR did lift its 2017 GDP outlook to 2 per cent from 1.4 per cent, it also concurrently cut its forecasts for growth in 2018, 2019 and 2020 to 1.6 per cent, 1.7 per cent and 1.9 per cent respectively.

Sterling was also weighed down by the rally in the US dollar, which was boosted following a blockbuster ADP report on private sector jobs growth. The market is now taking the view that a US rate hike next week is all but a done deal, with Fed fund futures pointing to a 100 per cent chance of that happening.

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