GBP/EUR levels have remained fairly flat during Wednesday’s trading, after the EUR had looked to be strengthening again early on. The EUR has performed well against its Sterling counterpart this week following negative Maufacturing and Production data. This move was in contrast to the recent positive data that has been eminating from the UK but despite some positive statements about our economic recovery over the past few weeks, it didn’t take long for new Bank of England (BoE) governor Mark Carney to dampen spirits with his announcement that we can expect UK interest rates to remain low for years to come.
This statement could be a way of controlling the Pounds strength against the EUR. A strong Pound means we either need a healthy, vibrant Eurozone who have the financial capabilities to trade with us, something that is not going to happen overnight, or more realistically a weaker Pound in the short to medium-term. Whilst I do believe Carney will want to keep the Pounds levels in check, we should not kid ourselves into thinking that all is now well with the UK economy. Whilst we are clearly improving we have to remember that everything is relative to the previous situation. So the small growth we are seeing is a major bonus when you have been stuck in a recession but in terms of a vibrant, healthy economy in the long-term we are still a long, long way off.
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