Yesterday proved to be a quiet day for GBP / EUR trading as the Institute of Fiscal Studies warned that Chancellor Alistair Darling will have to double his fiscal tightening efforts in a bid to bring public borrowing under control. The Institute warned that an extra £39bn a year would be needed to bring recent expenditures under control, with the Budget due in just over two weeks on 22nd April. It was also revealed that new car sales were 30.5% lower last month than a year ago, as the gloom deepened further within the car industry. Any optimism lingering from the G20 meeting last week soon evaporated and the FTSE 100 ended the day 1% lower as investors became risk averse, with sterling coming under selling pressure.
The Bank of England’s interest rate decision looms on Thursday, with the Caxton FX analysts anticipating that rates will be kept on hold following a swathe of cuts in the past 6 months. The policymakers are also expected to see how the recently implemented quantitative easing programme is affecting the markets.
Today, investors will take note of industrial and manufacturing details released in the UK, with final fourth quarter GDP figures released within the eurozone this morning.
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