The defeat to Germany may have left England fans despondent, but the despair hasn’t affected the Pound which has managed to make some gains pushing up above 1.50 against the US Dollar.
Before the recent recession there was a lot of talk of global decoupling, with the global economy supposedly relying less and less on US consumption, talk which did mostly disappear as the failures starting in the US banking system brought down the economies of the Western nations. Lately as the US economy has had good or bad news the Dollar has reacted more to what the figures means for global growth rather than just for the US (do for example bad news for the US, actually strengthen the Dollar as global risk appetite retreats), but there is some evidence that this is started to erode, and the latest weak data out of the US, poor housing figures and a slight downgrade to Q1 growth on figures released last Friday, have actually weakened the Dollar. US consumption is still a major driver of the global economy and will always have an effect on global sentiment, but risk appetite now seems more able to shrug of US news.
We had the G20 meeting over the weekend in which there was the strange sight of the normally economically neo-liberal American’s actually advocating continued government spending in an attempt to support the recovery, while the, at least in American terms, socialist European nations were actually arguing for deficit reductions and fiscal responsibility. In past meetings Gordon Brown had stood beside Obama, but as the budget showed, the new government is committed to getting the deficit under control quickly, so with the US isolated the European nations got their way, although the final statements do commit the nations to cutting their deficits, the actual speed and timing is to depend upon ‘national circumstances’.
It’s a quiet start of the week for data although towards the end we do get revisions to UK GDP and the usual first Friday of the month US payrolls. Today we have the Fed’s preferred measure of inflation, in the PCE which is expected to show inflation still remaining largely moderate, which will back up the Fed’s decision last week to keep loose monetary policy.
Posted in Daily Market News on May 30 2014
The answer depends on where the widely expected cuts actually appear. If the UK is left as a less 'investible' territory because, for example, corporation tax has been increased and/or corporate tax breaks have been abolished then GBP will fall against USD and probably also against EUR (although to a...VIEW FULL ARTICLE
Posted in Daily Market News on Jun 21 2010 by admin