* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Jemima Kelly
LONDON, March 9 Sterling slipped to a seven-week
low on Thursday, as investors brushed off the finance minister's
budget statement the previous day as largely a "non-event" that
would do little to boost growth in Britain as it prepares to
leave the European Union.
While Philip Hammond announced a rise in official growth
forecasts for this year and cut predicted rates of public debt
from November estimates, he also cut growth forecasts for the
coming years. His statement was not enough to turn either the
pound or the FTSE index positive on the day.
More impactful for markets was a much stronger than expected
ADP jobs report from the United States, which economists said
made an interest rate hike from the Federal Reserve next week
all but inevitable.
The U.S. data were released as Hammond delivered the last
part of his speech, and sterling, which had ticked a little
higher after growth forecasts for this year were revised, fell
back to a seven-week low of $1.2139 as the dollar surged across
the board on the jobs numbers.
It stayed close to that low on Thursday, down 0.1 percent on
the day at $1.2150. Against the euro, the pound hit a seven-week
trough of 87 pence.
"The UK Budget was largely a non-event," said Societe
Generale macro strategist Kit Juckes. "UK fiscal policy is not
going to boost growth, whereas U.S. fiscal policy is still
expected to do so - the Fed is going to hike rates, whereas the
(Bank of England) is not."
"The US economy will grow faster in 2017 than 2016, whereas
the UK will not and the 2018 gap will be significant. It all
continues to weigh on sterling, and $1.20 remains in our
sights," he added.
Markets are concerned by signs that the 12 percent fall in
the pound in trade-weighted terms over the past year --
which has driven up inflation -- and uncertainty over how
Britain negotiates its exit from the EU are finally having an
impact on UK household spending.
"Increased uncertainty due to Brexit so far only seems to be
handled with a 'wait-and-see' strategy," wrote SEB strategists
in a note to clients. "The pound remains vulnerable when the
markets focus shifts back to Brexit."
(Editing by Toby Davis)