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UK Gross Domestic Product Improves

January 29, 2016 by Tom Higham

It has been announced that the UK economy grew in the fourth quarter of 2015 by 0.5% which was positive news for Sterling exchange rates (GBP) which strengthened in yesterday’s trading session as a result. This news means that the UK economy grew by 2.2% in total through 2015 which is a positive figure and one that should bring some reassurance for UK retailers, manufacturers and perhaps most importantly for UK consumers. The UK is now one of the fastest growing economies in the Western world, something I am sure that George Osborne and the Bank of England will take some solace from.

euro-pound-dollar-notesHowever, while this is positive news for the UK there was a slight dampener added by the International Monetary Fund (IMF) who stated that the strong growth the UK has witnessed is likely to slow until the global economy improves. As discussed in yesterday’s USD currency report, problems in China have started to filter through to other economies and has resulted in a slow down in growth across the world and so the UK will be one of many countries that are likely to be operating in a more challenging environment than we have seen for the last couple of years.

Since the start of the year the Pound has been under pressure and we have seen it weakening against many of the major currencies and while the positive Gross Domestic Product figures yesterday help, I do not expect Sterling to recover to the same sort of levels we saw for much of last year. In fact, in my opinion I would expect Sterling to hold relatively steady at these current levels unless there are further developments in China and other leading economies that cause shock waves in the global economy. With no sign of an interest rate hike in the UK, a challenging economic environment and the Eurozone (the UK’s largest trading partner) under pressure, I believe the UK will find it difficult to match the growth we saw in 2015 and therefore the Pound will hold around its current levels.

Filed Under: British Sterling Tagged With: China, Gross Domestic Product (GDP), Pound strength

What’s causing Pound Sterling to slide?

January 26, 2016 by Jonathan Verrall

The Pound fell to a 7-year low earlier this week following the Bank of England Governor Mark Carney’s comments regarding there being little need to raise UK interest rates off of their record low, dampening many investors hopes of seeing a UK interest rate increase in the near future.

Having chosen not to follow the US Federal Reserve’s decision in December and raise rates for the first time in nearly a decade, Carney said ‘Britain was a more open economy and more susceptible to the global slowdown in demand for exports and investment’ and that it had always been that way.

The International Monetary Fund (IMF) downgrading its forecast for global growth by 0.2% this year, the recent plunge in oil prices and rapid slowdown in China have all taken their toll on sterling investors who are still smarting from Mark Carney’s comments on Tuesday morning.

Filed Under: British Sterling Tagged With: China, Mark Carney, UK interest rate

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