Investing.com – The U.K. finance minister George Osborne announced on Wednesday that the Office for Budget Responsibility (OBR) cut the growth forecasts for British economy during the next three years and also trimmed inflation estimates.
The OBR reduced expectations for GDP growth in 2016 to 2% from the prior November forecast of 2.4%.
The estimate for 2017 was cut from 2.4% to 2.2%.
Additionally, the forecast for 2018 GDP was lowered to 2.1% from 2.4%.
Osborne also took the opportunity to warn that these growth forecasts assumed that Britain would maintain its membership in the European Union after the referendum scheduled for June 23 and that a vote to leave, known as a Brexit, would heighten uncertainty surrounding these forecasts.
Furthermore, Osborne said that inflation would be just 0.7% in 2016, revised from the original forecast of 1% back in November.
The pound showed weakness immediately following the announcement, dropping close to 50 pips against the dollar.
At 13:14GMT or 9:14AM ET, GBP/USD fell 0.68% to 1.4054, GBP/JPY dropped 0.27% to 159.68, while EUR/GBP rose 0.24% to 0.7869.