Sterling continues to benefit from the uncertainty in the market

Chinese production slowed once again in August although the flash Purchasing Managers’ Index (PMI) edged up to 49.8 in August from July’s final reading of 49.3. The index was still below the 50 point mark which would show an expansion. Following this, the so called safe haven currencies declined.

It is expected that figures due for release in the UK on Friday will show that companies are not investing regardless of the government’s effort. The second quarter figures are expected to show a stagnant position of investment.

The rating agency Moody’s cut the long term sovereign debt rating from Aa2 to Aa3 with a stable outlook. They said this is due to concern over the country’s deficit / borrowing levels. Japan has the highest public-debt level in the developed economies.

The stock markets have rallied on the back of the markets expecting further stimulus measures by the US Federal Reserve. The US Dollar has weakened on the back of the speculation as it currently trades around 1.65 against Sterling.

Sterling continues to benefit from the uncertainty in the market as it hit 1.15 at one point on Friday against the Euro. Sterling also made ground against the high yielders reaching almost 2 on the New Zealand Dollar and 1.58 on the Aussie Dollar.