Better than expected growth figures for the last 3 months from June to September have boosted Sterling following a mediocre trading performance through October.
By Luke Trevail of TorFX
UK Gross Domestic Product (GDP) showed that the economy strengthened by a full 1%, dragging itself out of the worst recession that we have been subject to in generations. The Queen’s Diamond Jubilee and the marvelous London 2012 were the main factors that drove the figure but already market analysts are debating whether “on the basis that the Olympics won’t happen every month” the figure is a false positive with the actual picture of the UK economy remaining gloomy at best.
This fact remains to be seen of course so the focus in the short term may now fall onto the Eurozone once more. The ECB are still very determined on easing fragmentation and their endeavours seem to be paying off. Bank lending in Italy and Ireland has stabilized in line with a steady flow of banking deposits being made and the Irish housing market posting some positive figures throughout Summer and into Autumn.
The risk of further weakness lingers heavy however with data for the last few weeks from countries that are particularly exposed to high unemployment and further possibilities of austerity, ie Greece, Spain and Portugal, and it is these countries that will determine the way that the Euro moves over the coming weeks. Specifically Greece will be spoken of throughout November and it is possible that they will run out of money and need to once again go cap-in-hand to the bank of mum and dad, or Germany as it’s better known!
Advice to euro buyers is to be aware of continued volatility as the markets will not be easy to read over the coming weeks.