Sterling was set for its strongest weekly gain in more than three months on Friday, reflecting investor relief following the release of British Chancellor Rachel Reeves’ long-anticipated budget earlier this week.

On Thursday, Reeves defended the government’s spending plans, which will support increased welfare outlays by pushing the nation’s tax burden to its highest level since World War Two. The government indicated it intends to raise £26 billion in additional taxes.

At the time of writing, the British Pound was trading 0.2% lower at $1.3202. However, it has gained roughly 0.85% over the week so far, positioning it for its largest weekly rise since early August, Reuters news agency reports.

That said, Sterling’s gains following the budget appear to reflect a relief rally rather than signalling the beginning of a long-term upward trend.

The Pound rose above $1.32 as investors generally welcomed the budget’s indication of a more disciplined approach to borrowing, say analysts. However, the subdued market reaction suggested that much of the fiscal plan had already been priced in, and the gains in Sterling likely also reflected the unwinding of pre-budget hedges.

However, support from the Pound’s yields is expected to weaken, limiting its potential for further short-term gains as additional Bank of England rate cuts are anticipated.

The Bank of England held interest rates steady in November in a narrow 5-4 vote, though markets anticipate that the central bank will restart its rate-cutting cycle at next month’s meeting.

Since the start of the year, the Pound has risen 5.56% against a generally weak Dollar.

Meanwhile, the Euro remained stable at about 87.58 pence, below recent highs.