Wednesday 9th November 2011
Good morning. Sterling rose against the US Dollar and the Euro yesterday, after the National Institute of Economic and Social Research (NIESR) said British economic growth held steady at 0.5% in the last 3 months. The news also that Italian PM Silvio Berlusconi is set to resign has weakened the Euro slightly. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1670
• GBP/USD 1.6093
• GBP/AUD 1.5570
• GBP/NZD 2.0257
• GBP/CHF 1.4454
• GBP/CAD 1.6272
• GBP/ZAR 12.710
• GBP/JPY 124.81
• GBP/DKK 8.6861
• GBP/NOK 9.0421
• EUR/USD 1.3785
UK GDP at 0.5%
NIESR’s forecast of 0.5% growth yesterday helped calm fears that the UK could be slipping back into recession, though concerns about a very fragile recovery remained as data showed industrial output flatlined despite a modest rise in manufacturing.
“The forecast of GDP growth staying steady through to October from NIESR has supported sterling a little,” said Lee McDarby, head of dealing for corporate and institutional treasury at Investec.
The figures helped push the Pound slightly higher against both the Euro and the US Dollar.
Silvio Berlusconi set to resign
Italian PM Silvio Berlusconi says he will not stand if Italy holds early elections, a day after promising to resign as soon as parliament passes urgent budget reforms.
“I will resign as soon as the law is passed, and, since I believe there is no other majority possible, I see elections being held at the beginning of February and I will not be a candidate in them,” he said.
There are serious problems in Italy at the moment. It is a country of anaemic growth and a debt mountain of £1.6 trillion. There are fears the debt crisis will spread from Greece to Italy, and this has weakened the Euro and the reason exchange rates are significantly higher than they would otherwise be.
A few bits to watch for from the UK today: BRC Shop Prices, Trade Balance and Goods Balance. The Trade figures in particular could affect the value of the Pound. Not much else of interest today other than some Inflation data from New Zealand.
Tomorrow we have the BoE decision on whether to pump even more money into the economy through their Quantitative Easing programme.
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