Sterling Boosted By Positive News With Scope For Further Recovery

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This more positive outlook for the UK economy suggests there is scope for a further recovery in Sterling in the weeks and months ahead.

Exporters' gain is still importers' pain as sterling remains vulnerable to bad news.

Stronger than expected data this week, from both the manufacturing and service sectors, coupled with positive sentiment from the G20, offers an improved outlook for UK economy and scope for further recovery for Sterling, according to foreign exchange specialists HiFX.  The news has helped to drive Sterling up this morning to 1.4828 against the Dollar and to 1.1007 against the Euro.

Marc Cogliatti, Currency Strategist at foreign exchange specialists HiFX explains, "The latest manufacturing and service sector figures from the Chartered Institute of Purchasing and Supply (CIPS) both revealed an unexpected slowdown in the rate of contraction.. For manufacturing, one of the main contributing factors to this improvement was the recent weakness of Sterling, making UK exports more attractive for overseas markets. Many commentators, including Lord Mandelson, have highlighted the potential benefits of a weaker pound in the current economic climate and these figures confirm that the recent decline in Sterling is having the desired effect. However, a weaker currency isn't good news for all businesses Companies importing products from abroad have felt their margins squeezed and have been trying to pass the extra cost onto the end consumer as demonstrated by the pick up in CPI inflation last week."

Cogliatti concludes ";This more positive outlook for the UK economy suggests there is scope for a further recovery in Sterling in the weeks and months ahead. Nevertheless, at this stage, we would suggest that Sterling is still vulnerable to bad news so it is still too soon to get overly optimistic about a more sustained recovery."