Sterling and FTSE blow despite economy’s revival
Financial markets gave the latest GDP figures a downbeat reception, despite the official confirmation that the recovery strengthened in the second quarter of the year.
The pound immediately fell three quarters of a cent against the dollar to $1.5331 after the Office for National Statistics revealed that the economy grew by 0.6 per cent between April and June.
The FTSE 100 was also trading down, despite the positive economic news which was in line with consensus forecasts. “While the Government and policymakers will declare this first estimate of second-quarter GDP as a major step forward, deep down the markets will be disappointed by the rate of growth,” said Marcus Bullus of MB Capital. “0.6 per cent is double what we had in the previous quarter but it still shows that the recovery is meek, not mind-blowing”.
City analysts said the second-quarter growth, which was underpinned by positive contributions from the services, production and construction sectors, made it less likely that the new Bank of England Governor, Mark Carney, would resort to more quantitative easing to stimulate growth.
“If this really is the start of a robust and sustainable improvement in the economy, it begs the question of how long can ultra-loose policy be justified for,” said Chris Williamson of Markit. However, the City consensus is still that Carney will unveil some form of forward guidance on interest rates next month.
“We don’t think that today’s news will stop the monetary policy committee from implementing forward guidance,” said Vicky Redwood of Capital Economics.
“In fact, the firmer signs of recovery make it all the more important that the committee reassures the markets interest rates will stay low even as the recovery gathers further momentum,” she added.
- 1 PlayStation and Xbox hacked by Lizard Squad
- 2 Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
- 3 The Grace Dent Christmas Questionnaire
- 4 The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
- 5 British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
PlayStation and Xbox hacked by Lizard Squad
Antonio Martin shooting: Black teenager may have tried to ambush patrolman, says police officer's lawyer
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
Boxing Day snowfall set to push even more bargain-hunters online for sales
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Alex Salmond has 'broken his word to the Scottish people' says Scottish Lib Dem leader
iJobs Money & Business
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...
£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...
£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...