Currency Solutions report on the Pounds position of vulnerabilty in the Foreign Exchange Markets. Having lost some of its recent gains since 9.30am when swelling budget deficit figures were released in the UK. As the Government prepares to implement the much debated spending cuts, net borrowing hit ã22.8 billion compared to ã16.7 billion a year earlier. Despite higher than forecast Inflation figures last week spending for November has risen to its highest levels since February.
This news comes the day before the Bank of England minutes are due ââ¬â the general sentiment prior to Januaryââ¬â¢s VAT rise is shaping up to make Sterling potentially vulnerable
Details of the outlook for UK growth as well as the split in voting on monetary policy revealed in the Bank of England minutes tomorrow may be significant in shaping the way for Sterling towards the end of the year. Sterling had initially risen on the back of the CBIââ¬â¢s expectation for an interest rate rise in the next six months yesterday but the currency is still venerable. The UKââ¬â¢s ongoing exposure to problems in the Euro zone may also add to this fragility.
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Source: Currency Solutions
