Currency Exchange UK

 

Sterling Boost on Expectations of Recession Exit

Sterling Boost on Expectations of Recession Exit

Expectations that it will be announced later today that the United Kingdom is out of the recession has given a boost to the pound.

Against the euro, the pound rose 0.3 per cent in early trading, to 86.88 pence.  Forecasters predict that the country experienced growth in the fourth quarter, though by how much has opinions divided.  Overall, growth factor is expected between 0.2 per cent and 0.9 per cent.

Most economists are pretty confident that growth will be announced for the final quarter of 2009 and markets have already factored this in.

However, this is a risky tactic: if growth is worse than expected, the pound could take a knock and retreat back down.

Against the dollar, the pound remained unchanged this morning at $1.6226.  

Meanwhile, worries over China’s plan to carry out an increase in reserves for some banks caused currency investors to pare back their risky assets.  Japan took a knock too, with one of the United States’ rating agencies cutting its sovereign outlook for Japan to ‘negative’.