The pound gained against the broadly weaker dollar this morning but dropped against the euro before the release of data that may show the UK economy slowed in second quarter. Sterling gained against the dollar as US lawmakers failed to agree on a deficit reduction plan. Looking ahead to today, the first estimate of the second quarter GDP headline the economic calendar and recent high frequency data have suggested a deteriorating near term outlook. Analysts expect for UK economy to grow 0.2% in the second quarter after expanding 0.5% in the first three months of the year. Should the data skew to the downside, it is probable to see some pressure on the government and the BoE officials to do more to stimulate the economy. However, PM David Cameron has warned that the scope for further economic stimulus is limited, as the government needs to stick to its tight monetary plan.
The dollar dropped across the board during the overnight trade as President Barck Obama said the US may experience a “deep economic crisis” if leaders fail to reach a compromise. US lawmakers failed to reach an agreement to raise the nations 14.3 trillion dollars debt ceiling as August 2 deadline is approaching. US President blamed the group of Republicans in the Congress who are insisting on budget cuts and no tax increases. Expect for the dollar to remain under pressure as current situation could do serious damage to the US economy.
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