Pound Surges Past 1.17 Amid French Debt Concerns and Brexit Hopes

The pound-to-euro exchange rate reclaimed 1.17 for the first time since early August, holding steady at 1.1701 in early Thursday trade.

French debt concerns are likely having a negative influence on the euro, while there's some relief in pound sterling as Burnham's spending plans run over a ten-year timeframe.

KBC, the Belgian bank, notes that 'Sterling's hawkish BoE momentum is extended today by an upward revision to Q2 growth (0.5% Q/Q from 0.4%) and by PM Burnham opening the door to a potential Brexit reversal.'

However, not everyone is convinced of the pound's strength: Pantheon Macroeconomics says the proposals remain too vague for precise costing and do little to alter near-term borrowing.

The UK's high bond yields are attracting foreign exchange inflows, even if the ten-year gilt's close at 5.436% is an outright headache for the government.