Sterling volatility continues

3 April, 2013

Tom Arnold

The Pound is currently experiencing much volatility as the markets continue to be left very unsure of what the future holds for the UK economy. Relatively, Sterling rates are looking pretty good in comparison to the lows reached a couple of weeks ago, but we are still a long way off the highs of last year – 8% away in the case of both the Euro and the Dollar.

Recent data releases have been rather contradictory – incredibly positive retail sales figures, solid services figures, slightly negative jobs numbers and diabolically bad manufacturing data. Leading to a very real uncertainty as to what is going to happen in the UK economy, and more specifically what we can expect when we get the first reading of 2013 Q1 GDP later this month. Will we be in triple dip recession or will we have seen a positive growth figure?

Analysts are very split on what to expect – the British Chamber of Commerce think we will avoid triple dip recession, thanks to positive services sector numbers and a boost to exporters brought about by the weaker Pound. Whereas many other commentators point to a constricting manufacturing sector and continuing poor construction sector as being millstones that the economy surely cannot throw off.

However things pan out we are definitely in for a volatile time for the Pound, so make sure you keep in close contact with your CI account manager to keep fully abreast of developments.