Minutes released for the last meeting of the Bank of England monetary policy committee showed that no one voted to increase interest rates. This has meant a sell-off of sterling as fear of a slip back into recession takes grip. Unemployment figures have also increased by 0.2% last month.
The Swiss central bank has said it will do whatever is required to reduce the strength of the currency as the country suffers from such a strong Franc.
Yesterday Spain sold €5.7bn of treasury bonds following bond purchasing by the European central bank. The yield was higher than previous auctions.
Sterling Rallied briefly against the Euro as inflation hit 4.4%. The Bank of England governor Mervyn King continues to believe that inflation will naturally slow down to below the 2% target. Mervyn King said in a public letter to the Chancellor George Osborne that “recent developments in world stock markets and in the Euro area are of particular concern. There’s a risk of severe stress and dislocation in financial markets and, were this risk to crystallize, it would have a significant impact on the UK economy.”
German Gross domestic product (GDP) figures released yesterday showed a slow down more than the markets expected in the second quarter. German GDP fell to 0.1% versus 1.3% in the first quarter of this year.
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