With all eyes on Mark Carney’s appointment as new Bank of England governor, it will be interesting to see what his poicies are and the market recation to these. In truth he is inheriting an economy much improved to the one we saw at the turn of the year and the Pound has started to regain investor confidence over the past couple of months. However, despite some bullish statements our economy remains fragile and we continue to fight against high unemployment and inconsistent growth. The Pound’s strength against many of its chief rivals has reflected the inconsistency of this.
Carney can add a fresh approach and can boast a sound track record, so this may combine and have the desired effect. However, unless we can narrow our trade deficit, something that cannot be done unless GBP/EUR levels fall or Eurozone production levels increase, then our economy will struggle to make any significant strides forward.
I believe that Carney will instigate further rounds of Quantitative Easing, in the expectation of decreasing GBP’s value against the EUR and thus boost trade options with our largest export partners.
Key data: UK Manufacturing data showed significant growth according to yesterday’s PMI figures for June. The index rose to 52.5, its highest level in two years. This will aid hope of a strengthening economic recovery, as any reading above 50 signals economic growth.
Today we have Construction PMI data, which is also expected to show an improvement and tomorrow we have the same Market Services survey. Perhaps most important will be Thursday’s BoE interest rate decision, although levels are expected to remain unchanged at 0.5%.
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