The UK took center stage last week as post-election optimism sent the Pound soaring against peers. The Bank of England was more cautious on the outlook, choosing to keep monetary policy unchanged with Governor Mark Carney highlighting the headwinds facing the economy such as inflation. Although the economy has seen robust growth, evidenced by stronger than forecast manufacturing and industrial production, GDP expansion is forecast to taper. Aside from the UK, Euro Area GDP figures managed to show expansion over prior numbers with both quarterly and annualized GDP growth accelerating. Gains were driven by the fastest growth in years from regional economies such as France and Spain while Germany underperformed expectations. Further to the east, the People’s Bank of China cut interest rates again in a sign that policy measures will be eased further to accommodate the slowdown facing the economy. Industrial growth for the nation missed growth estimates and fixed asset investment also expanded at a weaker pace. The biggest concern was the deceleration in retail sales as the nation tries to shift from its export orientation to increased domestic consumption.
UK Election Spurs Pound Rally
Weekly Report - 18/05/2015