GBP/USD Surges as UK Economy Avoids Triple Dip Recession
In mid-morning trading, the FTSE 100 is down five points at 6426.
Equities edged lower ahead of the UK GDP announcement as dealers prepared themselves for the worst, but stocks are now broadly unchanged after the UK managed to avoid a triple-dip recession by the skin of its teeth.
I wonder if the relative euphoria will last when investors realise that while 0.3% first-quarter growth is enough to avoid another period of negative growth, it is a far cry from pre-2007 levels.
We are currently calling the Dow up 34 points at 14,710.
Broadly speaking, US companies have been beating analyst estimates and this is the real driver behind the rally rather than the UK economy’s marginal growth rate.
The GBP/USD spread betting market is up 1% on the back of the UK GDP figures that hit 0.3%.
Sterling leapfrogged above the $1.54 level after the country dodged another quarter of negative growth.
This news should keep the printing press at the Bank of England at a constant rate but any talk of additional QE will be left on hold.
Metals have rebounded from the landslide sell-off we witnessed recently.
Gold is still a long way from the $1,500 mark but rumours of central banks offloading their holdings are a thing of the past.
Copper has had a good run over the past few days but I fear it will only be short-lived as sluggish global growth might lead to another round of selling.
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Financial Market Comments from David Madden, Market Analyst, IG Index.
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