Sterling Reaches New High against Euro

Pound Sterling has recently hit a new high of 1.1756 against the euro, setting the current record for 2009 after the previous day’s trading saw the price having closed at 1.1672.

For the first time in 2009, economic experts from the National Institute of Economic and Social Research stated that the economy has shown increased growth in the months of April and May. This was backed by the recent strengthening of the pound and also growth in industrial output which rose in April for the first time in 14 months. Economic analysts were surprised by this surprise growth, which beat forecasts that predicted a fall of 0.1%.

At the same time, manufacturing output rose around 0.2% which has lead to many institutes predicting that the British economy may be at a turning point that could mark the end of the recession.

Given the increased strength of Pound sterling, this looks to provide added support towards the fact that the current financial crisis may soon be coming to a close. Recent surveys by the Bank of England concluded that inflation expectations for this year have risen, seeing their first rises since August.

Recent political events in the United Kingdom have provided some uncertainty for the British economy however, after turbulent affairs in the cabinet saw numerous party members resigning their posts. This challenge of Gordon Brown’s leadership provided a great deal of uncertainty, but tensions now seem to be coming to a close and the situation has since stabilised.

The continued strength of the pound vs. the euro and the dollar looks set to increase confidence in the British economy after a period which saw industrial output falling since February 2008.

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