Could The UK Avoid A Triple Dip Recession?
The Confederation of British Industry (CBI) have stated that they believe the UK can and will avoid falling into the well publicised triple dip recession. According to the CBI they predict that the UK economy will grow by 0.3% in the first quarter of this year which is a more confident view of the economy compared to many analysts and economists who are preparing for recession again. While the CBI have predicted growth for the UK they have downgraded their annual prediction stating the UK will grow by 1% rather than the 1.4% they previously predicted. The CBI also stated that they backed the Governments plans to focus their efforts on spending on projects such as improving infrastructure as they believe this will help the country. This is positive news for Sterling exchange rates but I believe it is still far too early to predict the Gross Domestic Product (GDP) figures for the first quarter of this year as we still have about 6 weeks left of the quarter! The mixed UK data however does make predicting whether of not we will be in a triple dip recession very challenging and therefore means that the UK exchange rates could be susceptible to a lot more volatility as more data releases are announced. Stay in close contact with your account manager her at Foreign Currency Direct plc to be kept informed of all the latest developments.
UK Inflation Holds Steady
The UK Consumer Price Index (CPI) figure, which is a key measure of inflation, remained steady at 2.7% in January which is the fourth consecutive month the level has held steady and but was slightly lower than predicted. However, a steady level of inflation is positive for the UK because if inflation had risen as predicted it may have led to the Governor of the Bank of England write an open letter to the Government explaining why inflation was over the 2% target. Steady inflation also means that the price of goods and services are steadily increasing which is good for the economy as long as people continue to buy these goods. This positive news may go to back up the CBI’s prediction of the UK avoiding the triple dip recession but realistically only time will tell.
Obama To Focus On US Economy USD Exchange Rate
Last night US President, Barack Obama, stated that he planned to revive the US economy which is currently struggling with minimal growth. Being the most powerful economy in the world the strength or not of the US economy can have a big impact on the rest of the world, as is often said when America sneezes the world catches a cold! At present the US Dollar (USD) has strengthened against Sterling and I don’t expect this trend to change anytime soon despite the problems in America and now with Obama expressing his desire to focus on the US economy could give more confidence to the US and therefore the global economy which could reinforce the USD’s status as a safe haven currency and also encourage larger currency flows.
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