Pound slides against the Euro
Although it is true that sterling has strengthened generally by about 1.5% in the month that ran up to the Bank of England policy meeting early in March, it has been put down to the overall strength of the UK’s growth outlook in comparison to some other countries. However, it has since that date fallen and against the Euro and it has lost around 4 cents in the space of the last week.
It is believed that the tensions in Ukraine have had a smaller effect than could have been expected, and much will depend upon the effects of the budget that is being delivered on March 19th the market waits.
However it is the US dollar that is the key to Britain’s recovery, at the present rate of 1.66 it is having an adverse effect and it is inhibiting exports. Ideally the rate should be at 1.50 for Britain to be competitive in the export market; the current rate is causing problems and deflation, good for the household, but not for business. With the rate at 1.66 exports are sure to be down and imports up when the next set of figures is released.