After seeing Sterling rates fall against its euro counterpart for the past few weeks, it was understandable that investors were growing concerned over the lack of growth we were witnessing in the UK economy. The UK remember is still officially in recession, following two quarters of negative growth and with some reports last week suggesting our economy had once again stagnated during quarter 3, fears were growing that the Pound could be set for a turbulent ride up until Christmas. These fears will remain but have certainly been allayed, following a surge for GBP during Wednesday’s trading.
GBP has gained almost a cent on the euro, rising to 1.2379 at the high of the day. This comes in stark contrast to recent movements, which has seen the Pound struggle following a run of poor economic data. This was seemingly continuous up until this week where we saw an improvement in unemployment, retail sale and inflation figures and with further good news expected tomorrow, we could see GBP/EUR rates put pressure back on the 1.24 level. I do not expect levels to reach the highs (1.2860)of the summer but it will certainly bring some respite and relief to those investors who were concerned they would be trading back in the mid teens by the end of the year.
It is also worth noting that the positive movment today could be attributed to the markets factoring in the 0.6% growth we are expecting to see following tomorrow’s GDP figures, so any variation form the expected results could cause further market volatility. Personally I would expect rates to stay range-bound between 1.23-1.24, unelss there is a variation in the GDP figures, or any further pit-falls with Spain and their bailout requirements.
GBP/USD rates also improved by a cent, breaking back through 1.60 and providing excellent oppotunities for those purchasing USD. I feel these levels will be short-0for long, as
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