Possibility Of UK Growth In The Near Future

Despite the Office of National Statistics predicting contraction over the next 9 months, the British Chamber of Commerce said the economy grew by 0.5% in the third quarter, based on a survey of over 7000 businesses. The ONS itself is due to first estimate of economic growth in the third quarter on 25 October, which is expected by many analysts to show some positivity, due to the boost given to the economy by the Olympic season. In other UK economic news, it was announced yesterday that the construction industry contracted slightly, but not as much as expected. This is another sign of potential growth in the economy in the near future. However, the slowdown in construction figures caused the value of sterling to dip against the Euro, bringing euro to sterling exchange rates to a two week high.

In the Eurozone, unemployment has once again reached a record high of 11.4%, with 18.2 million being out of work. However, the Euro managed to stand its ground against both sterling and the dollar with the announcement from EU officials that Spain was ready to request a eurozone bailout for its public finances as early as next weekend. Bailouts are generally seen as an admittance of weakness in the Eurozone, but on the other hand they can provide a temporary solution to a nation’s economic problems. If the Spanish government decide to go ahead and accept a bailout (which is looking increasingly likely) we can expect to see the value of the Euro making short-term gains against the value of sterling.

Sterling did make some gains against the US dollar yesterday, itself weakened by the positive Euro data. However, these gains have fallen away this morning in anticipation for a data release at some point today which is expected to announce that growth in the UK service sector has slowed down. The value of the dollar has also been lifted by a stream of positive news from the American economy, thanks to encouraging levels of car and home buying in the US.

If you’re concerned about any future shifts in currency value, and have a requirement coming up soon, give you account manager at Currency Index a call to see if we can help