Sterling Moves into Recovery Mode, But How Long Will It Last?

Sterling is attempting to regain some of its lost ground today. At the end of last week, the UK pound sustained significant losses as weak PMI data highlighted the continuing problems the United Kingdom is having with economic recovery. Today, the UK pound is making some inroads against the euro and the US dollar, but there is a chance that the recovery attempt won’t last too long.

Evidence that stimulus attempts haven’t been working as well as hoped has been given the latest report on the effectiveness of FLS. There just isn’t enough going on to boost the UK economy, and the sterling continues to operate from a position of relative weakness. From PMI data to banks borrowing enough from a special program to really unlock the economic potential to continued austerity, there isn’t much going for the UK economy.

UK pound is getting a little help with the budget sequester in the United States, and with the difficulties over Italy in the eurozone. However, there is speculation that general weakness will become more evident in the sterling after the Bank of England meeting later this week — especially if policy remains relatively uninspired.

At 16:58 GMT GBP/USD is up to 1.5071 from the open at 1.5042. EUR/GBP is down to 0.8635 from the open at 0.8651. GBP/JPY is down to 140.5685 from the open at 140.8850.

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