Sterling moved UP by 0.7% to a nine day high of 1.1240 this afternoon and UP 0.6% against the USD to a one-month high of 1.6306 as recent news and views surrounding the UK improved.
Bank of England MPC member Andrew Sentance made stronger comments surrounding bank stimulus (money printing) indicating a pause by our central bank next month. The pound was also supported by higher industrial output for November adding to increased expectations (after strong retail and trade data) in the last few days that the UK finally left the recession in the last quarter. This afternoon saw further news supporting this view from the National Institute of Economic Social Research who confirmed a forecast that the UK economy grew last month by 0.3%. January 23rd will be a key area for official data when Preliminary 4th quarter GDP data is actually released.
I as do many still remain sceptical about recent sterling strength due to underlying issues with economic recovery in the UK. We are clearly lagging behind other major developed economies and there are still concerns over the government deficit, our credit rating and political uncertainty ahead of June’s general election. Until there is a clear strategy from the government (Labour/conservative) on how they will tackle the deficit in addition to the BoE stance on monetary policy, investors will continue to be deterred.
I’m off to play 5-a-side football tonight and smash a few goals in if I can get there, have a good evening!
