Autumn Budget was a ‘light shower’ for sterling, but a disputed US election ‘would be a typhoon’ – London Business News | Londonlovesbusiness.com

Working out which announcement sent the Pound plunging during the early part of the Chancellor’s speech is like rubbing your finger along a saw and trying to guess which tooth cut it.

Currency markets had been prepared for the worst, and their initial reaction was not positive as the Chancellor confirmed many of the widely trailed and controversial measures, including an increase to Employer’s National Insurance.

But sterling’s slide has since slowed, and the Pound has now regained all the ground it lost against the US Dollar on Wednesday and thus also against the many other currencies which are pegged to the Dollar.

Travel operators will be breathing a sigh of relief that the increase to Air Passenger Duty – a tax you pay on plane fares – was relatively modest. The Chancellor said that the increase would be ‘no more than £2’ on an economy class short-haul fare, though anyone travelling by private jet should expect to face a punishingly big tax rise.

This was no travel-friendly Budget, but anyone planning a foreign trip in coming weeks can at least be reassured that the Pound in their pocket is worth broadly the same this afternoon as it was this morning.

Sterling has enjoyed a very strong year, even if it has sagged in recent weeks. With next week’s US election still too close to call, the possibility of electoral paralysis in Washington could deliver a welcome upside for British travellers if the Dollar takes a dive.

Politicians can change the weather for currencies. Today’s Budget was a light shower. Another disputed election result in America would be a typhoon in comparison.