22.08.2011
Good morning!
The pound remains in good shape against a basket of currencies this morning, as financial concerns continue to shake the US and Eurozone, while in Britain in comparison public sector net borrowing enters the black.
Last month public borrowing in fact entered surplus in Britain, as the government returned -£1.961bn to its coffers compared to expectations of £0.2bn spending. This indicates that Chancellor Osborne’s deficit reduction plan is proving effective. For instance, in the first 4 months of 2011 the government spent £4bn less than in 2010 at just £40bn, and the OBR predicts government spending is on course to meet targets. So good news!
Turning to the Eurozone next, reports that the second Greek bailout has been postponed until mid-October have surprised the markets this morning, as Eurozone members debate who is going to secure the loans.
Last night Finland announced it had agreed to secure collateral on the second Greek bailout, but on doing so Eurozone members including the Netherlands demanded collateral on their loans too. Hence this has pushed back the deadline on the Greek rescue plan, as politicians accommodate the requirements of these other countries.
Elsewhere in the Eurozone, the markets have reacted sceptically to reports that the Spanish government has passed further spending cut measures. Last night finance minister Elano Salgado announced €5bn extra in spending cuts, including halving the VAT paid on Spanish properties.
The Spanish government has taken drastic steps to cut its budget deficit since 2009: debt is expected to hit just 6.3% in 2011 compared to 11.0% two years ago. In spite of this though, the markets seemed nonplussed b the latest announcements. The FT.com for instance noted that: Ms Salgado’s measures smack of a government that appears to have given up already.
Looking to the US last but not least, today marks the beginning of an annual economic symposium at Jackson Hole in Kansas, in which central bankers come to discuss ideas. In 2010, Federal Reserve Chairman Ben Bernanke announced he was initiating the second round of quantitative easing in the US at Jackson Hole, so hopes are high he might do something similar again.
This might not be quantitative easing round 3 however. In 2010 Bernanke announced he was printing funds in order to prevent deflation, but at the moment inflation in the US is at 3.1% at rising. Hence it is unclear what the markets expect.
Find out more
If you’re interested in finding out more about what’s happening on the markets, feel free to get in touch on 01494 781800. We’ll be delighted to help you however we can. In addition, you can visit our market reports page to read more about news affecting the exchange rates.
22 August 2011
Sterling still strong on Eurozone and US concerns
22.08.2011
Good morning!
The pound remains in good shape against a basket of currencies this morning, as financial concerns continue to shake the US and Eurozone, while in Britain in comparison public sector net borrowing enters the black.
Last month public borrowing in fact entered surplus in Britain, as the government returned -£1.961bn to its coffers compared to expectations of £0.2bn spending. This indicates that Chancellor Osborne’s deficit reduction plan is proving effective. For instance, in the first 4 months of 2011 the government spent £4bn less than in 2010 at just £40bn, and the OBR predicts government spending is on course to meet targets. So good news!
Turning to the Eurozone next, reports that the second Greek bailout has been postponed until mid-October have surprised the markets this morning, as Eurozone members debate who is going to secure the loans.
Last night Finland announced it had agreed to secure collateral on the second Greek bailout, but on doing so Eurozone members including the Netherlands demanded collateral on their loans too. Hence this has pushed back the deadline on the Greek rescue plan, as politicians accommodate the requirements of these other countries.
Elsewhere in the Eurozone, the markets have reacted sceptically to reports that the Spanish government has passed further spending cut measures. Last night finance minister Elano Salgado announced €5bn extra in spending cuts, including halving the VAT paid on Spanish properties.
The Spanish government has taken drastic steps to cut its budget deficit since 2009: debt is expected to hit just 6.3% in 2011 compared to 11.0% two years ago. In spite of this though, the markets seemed nonplussed b the latest announcements. The FT.com for instance noted that: Ms Salgado’s measures smack of a government that appears to have given up already.
Looking to the US last but not least, today marks the beginning of an annual economic symposium at Jackson Hole in Kansas, in which central bankers come to discuss ideas. In 2010, Federal Reserve Chairman Ben Bernanke announced he was initiating the second round of quantitative easing in the US at Jackson Hole, so hopes are high he might do something similar again.
This might not be quantitative easing round 3 however. In 2010 Bernanke announced he was printing funds in order to prevent deflation, but at the moment inflation in the US is at 3.1% at rising. Hence it is unclear what the markets expect.
Find out more
If you’re interested in finding out more about what’s happening on the markets, feel free to get in touch on 01494 781800. We’ll be delighted to help you however we can. In addition, you can visit our market reports page to read more about news affecting the exchange rates.