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More UK Positivity

More UK Positivity

The good news keeps coming for the UK economy as we saw GBP strengthen against the Euro and especially against the US Dollar yesterday. The outlook is looking good as the Pound seems to be in a particularly strong position at the moment for a variety of reasons.

The US Dollar weakened across the board yesterday as investors started to sell the currency on the back of the Bank of Japan rate decision and then good UK economic data.

The Euro is still in a bit of a state of contradiction as the hints of what they are going to do to ease the pressure keep coming. In their data release yesterday, the IMF lifted the 2014 growth projection in the Eurozone from 1.0% to 1.2% but warned against the negative implications of low inflation and urged the ECB to use unconventional measures to counter it..The problem with this, is that if it means quantitative easing  and purchasing asset-based securities, then are there enough assets to buy and isn’t this the market Draghi once described as “dead”?

The news out of the IMF was very positive for the UK as it was predicted the UK economy will will grow by 2.9% in 2014 and 2.5% in 2015 compared to the previously forecast 2.4% and 2.2%. With a slight cautionary aside that the UK recovery remains uneven and we should remain slightly cautious, this still meant that the UK will expand more than any other G7 nation, even outstripping the US at 2.8%. This has come on the back of the Pound strengthening by 11% in the last 12 months. Economists seem to be optimistic that this isn’t another false dawn and we really have turned the corner.

Photograph: Serge Bertasius Photography

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