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I used to hate times like this when I was doing this for a living.  How can you sound convincing when you really think 'It might go up, it might go down, but then again it might just go nowhere'?.  In truth, both sterling and the Euro are stagnating in a murky pool, just waiting for a decent storm to wash away the drudgery.

Good news, then bad...

The dear old ONS (Office of National Statistics) tried to cheer us up with some decent GDP figures, above expectations again.  Then just when we thought there might be a clear trend emerging, one Mr Martin Weale, the newest member of the BoE's Monetary Policy Committee, said the central bank's growth forecast for this year and next may be too optimistic, and that there is a good chance the UK will retract and return to recession.

Bad news, then good...

The Euro took a hit during the week when Standard and Poor's downgraded Ireland's debt rating. 

S&P fears that the growing cost of propping up the country's banks will further weaken the government's finances. The agency warned that the rating could be cut again if the costs of the bail-out rise or the economic recovery slows yet further.  A lower rating can make it more expensive for the government to borrow money on the markets, a potentially crippling blow to governments needing to finance large deficits.

Later, however, German business confidence unexpectedly increased for a fourth month in August to a fresh three-year high, suggesting the economy may not lose as much momentum as some economists forecast.  Europe’s largest economy expanded 2.2 percent in the second quarter, the fastest pace in two decades.  The Bundesbank described the fundamental economic situation as “very favourable”.  Crisis, what crisis?

So now what?

Search me.  Sorry, but there is no trend at the moment.  I still expect sterling to weaken for a while before picking up in the medium term, say six to nine month's time, but what will happen next week?  Pass.

A bientot,   Rob

Please note that all these comments are my personal view and do not represent any firm advice by either France Financial or the Spectrum IFA Group.

Rob Hesketh and France Financial 

Rob moved to France in 2003 after working for 30 years in International Banking in the City of London and Brussels. He joined the Spectrum IFA Group in 2005 and became registered and authorised by the French fiscal authorities in mid 2006. He is now a partner in Spectrum and looks after client relationships in the South West of France. 

 

 

 

 

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