The stock market wasn’t able to prepare itself with the sterling plunging against the US dollar as well as the euro. Several analysts argue that that the sterling could go “pop” as the market had managed to persuade itself that growth was predicted to be seen in prior quarters which should help strengthen the sterling. Moreover, the figure shows that the market is on the mending stage but the situation is still quite fragile.
The UK economy on the other hand is on a much sturdier position although there are still several challenges, not least from obstinately high inflation as well as static/negative wage growth, both of which are sure to inhibit spending ability. Moreover, the Eurozone economy still remains quite sensitive and being the major export market, its weakness clearly intimidates the entire economy in general.
Perhaps one reason why the response was silenced is that almost everyone was apprehensive what the Bank of England will do under the new Governor’s reign. The growing threat of possibly more quantitative easing has not faded into obscurity and everyone is well aware that if this actually happens, it will definitely push the pound much lower.
We are definitely experiencing a two-speed Europe start to become more evident as the furious debt crisis continues. With the absence of growth and inability of bailed-out nations in meeting their already tough austerity measures will definitely affect euro confidence, especially that the United Kingdom continues to expand its growth in line with the said forecasts.
The latest figures regarding the Eurozone debts reveal that the single currency region’s debts are indeed getting worse. If this summer is anything like the previous year, we expect several strikes and protests out across the Eurozone , especially that youth unemployment is running at extremely high levels in countries such as Greece and Spain.
The economic wellbeing of the besieged Eurozone remains far from certainty. Better-than-expected manufacturing and services data have little to prosper over the cracks of escalating sovereign debt, general strikes, rioting and political instability which is figuratively comparable to be comparable to a dark tunnel wherein the only light seems to come from a fast approaching train.
Politic will always remain to play its part. With Germany’s elections approaching fast, talks of splitting the Eurozone or similar proposals of some member states prove to be making quite a ruckus within the single currency bloc. Speculations and rumours reveal that some Germans are stressed at having to fork out tough existing austerity measures on their country. It’s really not a surprise that the consensus is for the euro to remain weak throughout the summer months with sterling might even benefited by becoming a safe haven currency once more.
A recent development reveals a spritely sterling continuing to bolster its strength against both the euro and the dollar with 1.1900 and 1.5600 respectively being the next targets for each of the currency pair.