Good morning and welcome to today\u2019s foreign exchange market commentary on Wednesday the 25th of January.<\/p>\n
The domestic economy doesn\u2019t look good and February may witness another round of liquidity injection by the Bank of England. The economy has nearly stagnated despite the central bank keeping rates at 0.5 pc for nearly a year now. GDP growth for the last three months in 2011 was recorded at 0.1 pc while the country\u2019s debt has breached the \u00a31 trillion mark for the first time in history. There\u2019s still room for more quantitative easing measures as the debt-GDP ratio remains well below 100 pc (64.2 pc, for Greece it remains at 160 pc). However, the UK needs to reduce its dependence on the EU and look to kick-start exports in the new and emerging markets, if it wishes to avoid a double-dip recession.<\/p>\n
The IMF issued warnings yesterday saying growth in 2012 will be too sluggish in the world\u2019s advanced economies to make any dent in the prevalent high unemployment rate. Britain\u2019s growth outlook for 2012 was cut to 0.6 pc from earlier 1.6 pc and the country is expected to bounce back to growth of 2 pc in 2013. UK\u2019s official growth outlook stands at 0.7 pc for 2012.<\/p>\n
IMF\u2019s chief economist Oliver Blanchard said the global growth may stall in 2012. Under a risk scenario analysis that excludes the possibility of the euro break-up, IMF predicts a global growth rate of just 1.3 pc from the projected 3.3 pc for the year.<\/p>\n
To stimulate growth in the region, the IMF had urged countries with \u2018fiscal space\u2019 to moderate their austerity measures since it reduces government spending and affects the economy\u2019s growth. Treasury officials however, stressed that the IMF was not referring to the UK. Now that the country\u2019s debt has crossed the trillion pound mark, it\u2019s critical for the country\u2019s future that the deficit is dealt with decisively. The country\u2019s borrowing is lower than same time last year and is on track to hit the \u00a3127 billion spending-cut mark in 2011-12.<\/p>\n
CURRENCY RATES OVERVIEW<\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.1984
\nGBP\/US$<\/strong> \u2013 1.5609
\nGBP\/CAN$<\/strong> – 1.5783
\nGBP\/AUS$<\/strong> \u2013 1.4834
\nGBP\/ZAR<\/strong> \u2013 12.40
\nGBP\/JPY<\/strong> \u2013\u00a0121.73
\nGBP\/NZD<\/strong> \u2013 1.9242<\/p>\n