The Olympics Effect One Year On
This time one year ago we were basking in the positive, friendly and exciting Olympic games where the British athletes truly exceled. Now with the memory of Super Saturday and the other incredible events fading we are instead basking in warm weather and the hope that the UK economy is starting to make tracks (no pun intended) on the road to recovery. So, it has been announced today that not only did the Olympics leave a legacy behind but has also contributed £9.9 billion to the UK economy.
Prior to the Olympics it was questioned what the impact would be, whether the astronomical costs of building stadiums and hosting the games would damage an already fragile economy or whether the games would actually provide a boost to the UK. It appears that the latter has happened. The games has brought with it foreign investment, huge levels of sales in London and the wider economy and according to some estimates by 2020 the overall benefit of the Olympic games to the UK economy could be as much as £40 billion! This is yet more much needed positive news for the UK economy which could help provide more support for Sterling. In fact, since we hit some of the lowest levels we have seen for some time just a few days ago we have heard positive news including the Bank of England currently not considering Quantitative Easing, strong retail sales figures and now the fact that the Olympics is still having a positive impact on the country. Perhaps the Olympics legacy will not just be sporting one also financial. In two weeks last summer Ennis, Wiggins, Farrah, Murray and co may have done more for the country than any politician or banker has managed to achieve in the past 6 years!
US Credit Upgraded
Following numerous countries having their credit ratings downgraded we have heard positive news from Moody’s that they have upgraded the US credit rating back to triple A. The credit ratings agency has stated that the upgrade has been because of a declining budget deficit and the fact the US economy is growing faster than expected. Moody’s also stated that they expect the US economy to continue to grow in the coming years which is not just positive news for the US but also for the global economy. Due to the size of the economy and the reliance many other countries have on the US any economic news from America can have wide reaching effects, as they say when America sneezes the world catches a cold. While this can be true so is the opposite; any positive news can help other economies across the globe so the news from Moody’s is very positive.
With the first major upgrade in a long time we could start to think that a global recovery could be in progress. This could be great news for Sterling coming at a time when we are already hearing a lot of positive economic news for the UK, and should this continue we could see the Pound push back up higher against a number of the major economies. While this all sounds great the green shoots of recovery are likely to grow slowly, I would not expect that at the end of this year, or even this time next year we will be bathing in the economic conditions we were experiencing back in 2007 but if the current trend continues we could see a stronger global economy and in the currency markets we could the Pound pushing back up towards the 1.20 mark against the Euro and 1.65+ against the Dollar.
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