Currency Watch: Are we in growth again or not?

So we’re growing, or are we? Spending rose by 0.5% in this year’s first quarter, as had been expected by the analysts and economists in the City, but we did of course see a 0.5% dip in the fourth quarter of last year.

In effect, we’ve been basically been stagnant – tying our shoe laces while other economies have been progressing ahead.

No wonder that the latest reading of UK consumer confidence has shown that the average person is as gloomy as they were at the depths of the crisis, which seems strange given that we are seeing improvement. Maybe the average consumer is only seeing the price rises and not the sentiment changes elsewhere.
 
The pound is remaining fairly weak at the moment as data continues to support other currencies more so on a yield differential basis.

If we are to be honest we had hoped that the GDP figure would give GBP more of a rocket than it has done in the past week. It is still massively undervalued on a purchasing power parity basis and we believe that this regression should begin soon.
 
Jeremy Cook, chief economist at World First foreign exchange, 06.06.2011