The currency markets have been likened to the Great British weather this last month; gloomy for long periods with a few sunny days that promises much but delivers very little before the clouds gather once more.
By Luke Trevail of TorFX
We must remain optimistic, however, as sterling has had a boost with the news that the UK has avoided tumbling into a triple-dip recession after the Office of National Statistics announced that the first quarter of 2013 had seen a 0.3% growth in our economy, and eased the woes of the ever vulnerable pound.
Currency markets reacted well, and against the euro we tried to reach the €1.20 price before settling down to a strong footing of around €1.1850, far better than what we have seen since early February.
UK Chancellor George Osborne was satisfied with the figure and proclaimed that “Britain is recovering and we are building an economy fit for the future”. A bold statement sprinkled with political spin it maybe, but market watchers have been encouraged by the news, and the belief that we can build from here is very much the case.
The eurozone, and sentiment behind its ability to avoid any further negative news is waning. The cash cow of the summer tourism season filling the coffers of southern Europe has just started, but even a great year may not support the single currency longer-term, and we will likely see it weaken, which, along with a strong pound, could allow those of you that have been waiting to buy euros at better rates during the winter to take advantage of a stronger pound in the short to medium term.