Daily Archives: June 6, 2012
Sterling had hit close to a 3 year high in recent weeks as it looked like the UK was on a reasonably solid economic footing despite techinally re entering recession. Friday’s Purchasing Managers Index (PMI) Manufacturing data however showed a much bigger drop than expected for April. The reading of 45.9 was much worse than the 49.7 forecast. Any reading below 50 is seen as negative and represents a contraction, which weakened the pound.
This morning’s reading is expected at 54.5 and any reading lower than expected could provide evidence that the current global decline is also being felt by the UK and weaken the pound too. And then on Thursday we have Services PMI and the Bank of England Interest Rate decision where we may find out if the UK is to embark on more QE. It is now looking likely the bank will have to embark on more QE as the UK looks set to suffer as the Eurozone slows down. I expect the pound to be under real pressure this week, hence the losses against many currencies from last weeks rates.
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Australian Growth Better Than Expected
Australian GDP data overnight showed their economy grew at 1.3% versus the 0.6% expected. The Reserve Bank of Australia cut interest rates too to 3.5% on Monday citing worries in China and Europe affecting the Australian economy. The Aussie has strengthened to a one month high against sterling and with the pound looking shaky, may advance further this week.
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