Govt policy "could strengthen sterling" by Cheap Flights Booker UK

British travellers could benefit from government spending cuts through an increase in the strength of the pound, it has been predicted.
Duncan Higgins, a City analyst with foreign exchange firm Caxton FX, said the cuts proposed by prime minister Gordon Brown will have a stabilising effect on the British economy as they will reduce national debt, which currently stands at over £800bn.
Mr Higgins said that this unsustainable deficit has hindered the British economy"s recovery from the recession.
He added: "These spending cuts have a real potential to strengthen sterling.
"Huge deficits destabilise an economy, weakening the currency, but as the government starts cutting unnecessary public expenditure, we should begin to see a positive market reaction as stability returns to Britain"s nascent recovery."
If the proposed cuts are carried out, the pound could recover to around the €1.20 mark by mid-2010, Mr Higgins predicted, compared to its current value of €1.10.
Caxton FX offered a response to the Bank of England"s decision to hold interest rates earlier this month, saying it will add "a certain amount of stability" to the pound.
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