Posted tagged ‘UK’

Seven-Week High for Pound

April 15, 2010

The pound is so far having a good old week.  Having reached a high against the US dollar on Wednesday, it reached a 7-week high today after a poll showed that the opposition Conservative party have a clearer lead against the Labour party.

In the past weeks and months, a hung parliament has looked ever more likely with neither party showing signs of being a clear majority winner.  The Tories have always managed to stay slightly ahead but the level shrunk until the future of Britain’s political leader was less and less clear.  International investors have been avoiding the pound with the cloud of uncertainty hanging over the UK and it is likely that the overall shakiness will remain until the general election takes place in early May.

Britain has actually been enjoying a rather positive week in general, with a lashing of good data announced in the trade deficit and retail sectors.  Does this mean that the economy is picking up quicker than expected?  Can Britons plan their future with a Conservative government and will the budget deficit be cleaned up under their leadership?

Tonight on British television will be a live debate between party leaders – how each performs could have a significant effect on consumer, economic and fiscal sentiment.

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4th Quarter GDP Better than Expected

March 31, 2010

Tuesday brought some surprising news for economists: fourth quarter growth figures were revised upwards!  Now, it seems the UK economy grew by 0.4% and what is more, this was the final revision.  Having started with a minute 0.1% , we now know that the country exited the recession faster than had been thought!

However according to another survey consumers are still worrying about the economic outlook for the country.  In March, consumer confidence fell somewhat yet the risks of a double-dip or ‘W’ shaped recovery are still not significant.

Some accused media hype surrounding Alistair Darling’s latest Budget announcement as the reason for consumer fears.  Around his announcement, much was made over Britain’s large deficit and the Chancellor’s lack of drastic plans to clear this debt quickly (he currently plans to halve it in four years).

The pound edged up on the good GDP news.

Greece Unveils Austerity Plan

March 4, 2010

Investors were slightly mollified yesterday, leading to a rise in the euro against the US dollar.  The reason?  Principally, it was due to Greece’s unveiling of plans to put its economy back on track.  It plans to do so by introducing VAT rises, public sector cuts and other austerity measures to try and reduce the deficit from 12.7% to 8.7% within 2010.  Will they manage it?

The euro has really taken a strain thanks to the Greek Problem, while other european nations have been edging close to a similar situation.  Investors have therefore been largely cautious around the eurozone single currency.

Meanwhile, the pound is still enjoying a slight respite thanks to positive PMI and other economic data.

Improvement for UK Economy?

March 3, 2010

What’s all this?  Good news for the pound?  Surely not…

Yes, today the pound rose against the US dollar and the euro after some positive data concerning the UK economy was released.  According to recent surveys and indices, consumer confidence has risen to its highest level in two years, while the services sector is reporting notable improvement.

Consumers, while still cautious about buying large household goods, are now confident abouth the next 6 months – so much so that the index measuring this has risen to its highest point since 2004!  Looking at today’s numbers it is no surprise that investors headed back to the pound.

Indeed, the data was even better than expected – most economists had predicted much more moderate figures.  In addition, GDP growth rose to 0.3% for the final quarter of 2009 (not 0.2% as had been previously thought).  Overall it certainly looks like Britain has some hope on the horizon!

Yet only earlier this week, investors on the foreign exchange market were shaking their heads whenever the word ‘Britain’ was mentioned – after all, with a ‘hung’ parliament looking like a real risk and public debts still nearly as bad as those of Greece, the pound wasn’t looking like a particularly safe bet

Consumer Confidence rises in January

February 3, 2010

British consumers have been measured….and have been found happier (or more confident, to be precise).  Indeed, around three times happier than last year – which was a time of great concern, of wondering just how bad the recession would become.

No-one thought it would be as deep and drawn out as it actually was – with the eventual return to growth at 0.1% in the fourth quarter.  Now, we are in the fragile early stages of ‘health’, with economists and analysts treating the economy with the delicacy of a newly born lamb.  They warn us to take care, or we might send it heading back down – the first and second quarter results will certainly be worth a look!

Over in the world of forex the traders are juggling with the pound, hoping that it too recovers.  Until the Bank of England reaches its latest decision on QE, it’s likely to remain where it is.

Loan Shark or Low-Credit Relief?

July 31, 2009

Moral debate alert!!  It appears that there is something afoot in the world of doorstop lending…..

Provident Financial, the leading company for doorstop loans in the UK and Ireland, announced a rise in profits this week.  Up by 3.5 per cent for the first half of 2009, they have raked in around £53 million.  Now, charities are in uproar saying that Provident is causing people already in financial difficulty to fall yet further into poverty.  Why?  Because Provident charges an APR rate of around 545 per cent – and figures have shown that the amount of money owed to Provident from borrower debts is in the hundreds of millions. 

Provident’s personal and homeowner loans are indeed aimed at cash-strapped borrowers who need emergency funds.  But is it fair to say that they are tricked into the loan?  Charities may argue that poorer families are the worst hit and are the main customer of such loans, but does that mean that said customers are less able to make a decision?  Provident may argue that as a company, they are not being irresponsible (they did change their policy to make it more conservative and stricter around 2 years ago).  The reasoning for the higher rates has been explained as being due to higher labour costs (presumably labour means the Provident representative who visits borrower homes on a regular basis to collect money) and also due to higher default rate than regular loans.

Whichever argument is right, the figures show that there is a link between unemployment rising and the amount of customers going to Provident – customer numbers have risen by 5.3 per cent to 2.1 million in the UK and Ireland at the same time that profits have risen for the lender.

People are more desperate for money today and companies like Provident are providing a relief that could end in further debt….but whether the borrowers are duped into a loan trap is and will remain a heated topic.

IG Group in Healthy Profits

July 29, 2009

It is the hot new way to invest and is raking in the customers each month – financial spread betting.  The market leader for spread betting, forex trading and CFD platforms, IG Group, have reported healthy profits despite the recession.  Indeed, profits were up 30% to GBP 126 million. 

So why is this trade fashion so huge?  Spread betting firms report 2,000 new customers each month.  In fact, spread betting is attractive to investors and savers who are after a new way to make money.  Low interest rates, no commission – and it is cheap to get cracking.

Spread betting is also extremely exciting to those who have an appetite for a thrill – as markets rise and fall, profits can be large….and so can losses.  Make sure you take out a stop loss!

Futures traders are under a bit of negative attention in the USA, where regulatory watchdogs are trying to prove that Futures trading on the energy market has a direct effect on oil price spikes and dips.  In the UK, the FSA says there is no evidence to suggest speculation on the markets has a negative effect on the price of a barrel of oil and are not taking action.