European session review: GBP mixed after announcement of UK's bumper 2021 budget

GBP traded mixed against its major counterparts in the European session on Thursday as investors continued to digest the UK's bumper budget, which was presented by the British finance minister Rishi Sunak on Wednesday.

The pound rose against JPY, CHF and EUR, fell against CAD, AUD and NZD, and changed little against USD.

Sunak's 2021 budget, which he delivered to the UK's parliament yesterday, set out generous measures to prop up Britain's economy as the country emerges from coronavirus lockdown. The extension of the furlough and self-employed support to September 2021 as well as the continuation of the business rates relief and grants were among the many measures of the budget. In addition, the chancellor announced plans to increase corporation tax in 2023 from 19 percent to 25 percent. The announced tax hike was sharper than businesses expected, as the UK's government tries to get to grips with the cost of its pandemic debts. Sunak, however, heightened that the headline tax rate of 25 percent meant the UK would still have the lowest corporation tax rate among the G7 countries.

The pound also remained supported by optimism over the UK's progress on vaccinations, the fact of the country averted a no-deal Brexit by reaching a last-minute trade deal with the EU at the end of 2020 as well as signals from the Bank of England (BoE) that negative interest rates are not to be implemented any time soon.