Sterling, which has had a bad August, lost further ground last week as the fallout from the minutes of the Bank of England’s (BoE) last meeting highlighting their intention to expand quantitive easing whatever the affect on sterling continued to rumble on. A very marginal improvement in UK GDP figures last Friday did nothing to support sterling having already lost roughly 4% against the euro and the US$ in the past 4 weeks. Given that the BoE are not due to meet again until the 10th of September and very little significant UK data due out next week, sterling may well find itself in this lower trading range until there is a new development or perhaps a change of strategy from the BoE. However, amongst all this gloom the expectation for the UK to return to growth during quarter 3 of 2009 is positive and brave and unpopular decisions are often needed at times of crisis.
The US$ sits at US$1.635/£1 inter bank this morning. A marginal improvement in US consumer confidence and estimated GDP figures brightened the outlook for the US economy this week but did little to strengthen the US$ due to the risk-appetite effect present over the last year. Most recent US data now points towards economic growth in the coming quarter and though spending and confidence seem to be on the up the improvements will be very gradual and unemployment will remain a big challenge. Figures for non-farm payrolls [i.e. unemployment] are released this coming Friday so it will be interesting to see how this lagging indicator is faring.
No comments:
Post a Comment