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Sterling received another boost this morning after a leading think-tank announced that Britain will avoid a double-dip recession and its economy will expand at trend growth rates as early as 2012. In the latest forecast from the National Institute for Economic and Social Research (Niesr), it predicts GDP growth of 1.3% this year, 1.7% next year and 2.2% in 2012. The news follows recent strong economic data over the past week where GDP and retail sales figures shocked the market on the upside. The pound has surged to 5 month highs against the dollar and the general consensus is Sterling will continue on a long term rise against the Greenback. Merv “the swerve” King will be speaking today and as usual, I’d expect “doom and gloom” comments from the BoE chief. Most likely on his radar will be the GDP figures from Q2 which showed a rise of 1.1% QoQ (0.6% forecast).
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Just when you thought it was safe to get back into the water after the previous EURUSD short squeeze, we see a 2% move up in the pair and it now trades over 1.25. The combination of the successful Spanish bond auction, speculation of a disappointing US jobs number later today and fears over a US double dip recession all helped the Euro climb against the Dollar. However, the fall-out from the ECB rollover of €442 bn of bank funding has delivered a relative tightening of monetary policy compared to other countries. The subsequent yield advantage of the Euro has been quickly identified by the market and has driven up the price of the Euro against both the Dollar and Sterling. A weaker Euro is needed to drive growth in the Eurozone over the medium term, so the result of the ECB policy of shoring up a trembling Eurozone banking system has been slightly counterproductive. The announced austerity measures across the Eurozone will need to be offset by foreign demand for growth to continue, something that a stronger currency makes less likely.  Whether the ECB sees this as a temporary blip in the downward trajectory of the Euro or we see further Euro strength, it is clear that this issue will be at the front of policy maker minds over the coming months.
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Watch Mark O’Sullivan’s interview on the BBC

http://www.bbc.co.uk/iplayer/episode/b00myn8q/Working_Lunch_22_09_2009/

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What a week for the pound!  After a spell of inactivity akin to watching paint dry suddenly the GBP/EUR pair sprung into life.

The move started last Friday after we had further positive feedback from the US economy as existing home sales came in much better than forecast hitting 2 year highs; this data and a healthy economic assessment from Ben Bernanke boosted the good cheer in the markets. We are approaching the one year mark from the collapse in the financial systems and at the moment things are looking pretty steady and stable. However I personally feel that economic data will be closely scrutinized in the next quarter to look for sustainability in the markets and not simply a knee jerk response to extra stimulus. An article in the FT by Nouriel Roubini points to a threat of a double-dip recession if recovery turns anaemic- this would not be good news for sterling. 

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The Harrogate show hosted with French Property News traditionally brings a varied selection of period and new build properties under one roof and affords both buyers and sellers the chance to meet experts in the fields of relocation, currency, taxation and property…this year did not disappoint. Read the rest of this entry »

CD market commentary quoted in the Daily Bourse in France…

http://www.daily-bourse.fr/le-dollar-remonte-apres-avoir-flanche-la-veille-Feed-AFP090513131158.iwyp9kpy.php