Mixed fortunes for sterling | 26/07/2013
After maintaining an upward trajectory for most of last week, sterling experienced more mixed fortunes this week. The pound performed well from Monday as Prime Minister David Cameron announced that improving economic conditions may allow the Coalition Government to implement tax cuts in the near future. Varying levels of trader optimism were seen in the run up to the release of UK GDP figures, which came out yesterday and revealed that the UK economy grew by 0.6% in the second quarter. These figures largely conformed to key predictions, however the possibility still remains that the Monetary Policy Committee may vote in favour of further quantitative easing when they meet again in August and the figures did little to play down that possibility, causing sterling to drop sharply against the majority of its major peers. Additionally, revisions of previous GDP figures revealed that recession in the UK was in fact worse than first thought, which further contributed to sterling weakness. Overall, sterling has certainly plateaued to a degree after performing well last week and we will need to see further strong economic data coming from the UK to maintain hopes of a sustainable recovery, persuade investors that the Monetary Policy Committee will not loosen monetary policy in August. If they do it would weaken the pound. There is little data of note being released today, but further movement may be seen as traders take stock of the GDP data and react to on-going speculation regarding future increases in quantitative easing. Call your trader now to track sterling performance.