Sterling climbed within half a cent of this year's high against the dollar on Wednesday as news of a record US current account deficit overshadowed Britain's 2005 budget. Britain's finance minister Gordon Brown set the stage for a May general election in his budget speech, boasting that under his stewardship, Britain had seen the longest period of economic growth since records began in 1701. But he had few surprises for the market, leaving sterling little changed at 69.64 to the euro in late London trade.
"There was very little in the budget to influence sterling in the near term," said Paul Robson, currency strategist at Royal Bank of Scotland. "There were a few tweaks here and there but nothing to change the macro economic outlook."
Sterling got off to a strong start against the dollar and extended gains after data showed the US current account deficit widened more than expected in the fourth quarter to a record $187.9 billion.
The pound rose to session highs above $1.9280, up 0.8 percent on the day, within half a cent of 2005 highs hit last week of $1.9325.
Concern over the US current account deficit was a key driver of the dollar's three-year downtrend.
Sterling showed little reaction to employment data earlier in the day which showed strong wage growth but a smaller than expected fall in the number of Britons claiming unemployment benefit.
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