Mark Bolsom forecasts a bumpy couple of years for UK consumers and businesses
All eyes are on the UKs GDP figures tomorrow, as the UK economy is widely expected to have exited recession in the final quarter of 2009.
Sterling could be exposed to some last minute positioning today, which forces it to trade independently of euro and US dollar movements before tomorrows Q4 GDP data, says Mark Bolsom, head of the UK Trading desk at Travelex, the worlds largest non-bank FX Payments specialist. If the data goes against the expected growth forecast, we expect that the pound will suffer significantly.
Even if the data shows that the economy is expanding; we still expect the pound to remain weak and that, theoretically at least, UK exporters will continue to benefit.
Bolsom expects the UK will show a growth of about 0.4 % in 2010. He says, Some economists are very bullish in their growth forecasts. My prediction is based on the fact that businesses still seem cautious about the strength of recovery and the effectiveness of quantitative easing.
For our business customers, credit conditions remain extremely tight and the prospect of higher taxes and public spending cuts are not reassuring.
Although we are expected to come out of recession officially tomorrow, for many businesses economic recovery remains completely intangible. They still have to make redundancies and slash budgets as their recovery remains sluggish.
We think that the chances of a double dip recession cannot be ruled out. Unfortunately, we forecast a bumpy couple of years for UK consumers and businesses.
D.C.