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Will they? wont they?

Will they? wont they?

The UK was once renowned for her world famous manufacturing expertise with achievements such as Concorde, the QE2, the Spitfire and the millennium dome (okay you can scrub the last one). The long term decline of the UK manufacturing base however seems to have been stemmed in recent times with manufacturers reporting growing confidence and a bulging order book. This is no coincidence though – as the government tries to realign the UK economy to one that is more balanced with manufacturing and services, as opposed to one that is over reliant on the services sector.

Recent quarter 4 GDP figures showed manufacturing to be the one bright spot in a rather depressing set of figures, growing by 1.1% compared to a 0.7% contraction in the service sector. This success in part has been facilitated by the weak pound as our goods are cheaper for people in other countries to buy. This will be another dilemma for the Bank of England MPC as and when it decides to raise rates – as this would almost certainly strengthen the pound and make our exports more expensive. For now though the manufacturing sector is taking advantage and the manufacturing PMI released today at 9.30 GMT should reiterate the health of this sector. Consensus forecasts are expecting at rate of 61.5, slightly lower than the previous month, but still near all time highs – anything above 50 is a sign of growth.

Our European partners also release PMI manufacturing data this morning which is also expected to show a healthy reading of 59, as Germany in particular adds to the positive growth sentiment. On top of this US data released yesterday showed the Chicago PMI touched a 13 year high. Now, all this is a little more positive than yesterday’s commentary! This release came as Fed member Bill Dudley said in a speech that the US outlook was “considerably brighter than six month ago” with signs of “broadening and strengthening” across the board.

In overnight trading, Sterling rallied to a 13 month high at 1.6305 versus a broadly weaker dollar on the view that US interest rates will rise much later than rates in other major countries, including the UK. Bernanke is testifying to the Senate committee at 3pm GMT, which is definitely worth keeping an eye on. The pound also strengthened to 1.1793 against the euro with the market thinking higher oil prices will cause the MPC to raise rates quicker than other central banks, to counteract the effects this will have on the already ballooning UK inflation rate.

What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.

 

Currency UK will then offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.

 

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