MPC member not ruling out double dip
Currencies Direct August 24th 2010 - 2 minute read
The newest member of the Bank of England‘s rate-setting Monetary Policy Committee hit the headlines this morning. Britain faces “significant” risk of a fresh slump into recession according to Dr Martin Weale, who said it would be “foolish” to rule out the possibility of a double-dip downturn. He also thought the Banks central outlook on growth could be too optimistic in light of the fiscal cuts currently being implemented. The BoE forecast is for growth of about 2.8% in 2011 and 3.2% in 2012. Sterling has dropped over a cent against the dollar following the news and has traded as low as 1.5371.
M&A activity in the US, helped lift sentiment yesterday, unfortunately this did not last for long and both main stock indexes closed marginally down on the day. There is little economic news again today so focus is likely to remain on the existing home sales in the US which is out this afternoon at 15:00. Figures are expected to show that sales of existing US homes fell to an annual rate of 4.67million in July from 5.37 million in June. There is also housing data due out tomorrow which is due to show that sales of new homes rose to 340,000 from 330,000 in June.
In Europe we have seen data from the Federal Statistics Office this morning confirm that German GDP grew 2.2% in the second quarter compared with the previous three months, which is actually up 4.1% on the year. The news provides yet further evidence of the strength of the recovery in Germany whilst other countries in the Euro zone still falter. Yesterday consumer confidence in the Euro zone and the European Union improved slightly in August according to figures from the European Commission. The figures rose to -11.4 from -13.8 for the 16-country currency area and beat expectations of -12.8 although this data release went relatively unnoticed in the markets and did not impact on the euro.