Speaking before Parliament today, Chancellor of the Exchequer Alistair Darling stressed that the U.K. has many options on the table, and that more will have to be done to restart bank lending. Reflecting Trichet’s recent comments, Darling expects growth to begin for the U.K. in the 2nd half of 2009 while also citing that the outlook is ‘full of uncertainties.” Regarding currency markets, the Chancellor commented that a depreciating pound will help exporters and the economy. He reflected that there is still a large degree of deflation risk and while the BoE recently cut the key lending rate; there is still a “way to go before rates get to zero.”
The National Institute for Economic and Social Research predicted earlier today that the U.K. economy will contract -1.0% in the fourth quarter. Reacting to Darling’s comments and the NIESR’s expectations, the EUR/GBP is trading at levels not seen since 1995. The pair reached a record low of 87.87 Pence per Euro earlier in the trading session.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
