British Pound Sterling

The pound sterling (Currency:GBP) has moved higher against a host of key currencies through the course of trading today.

The pound euro exchange rate has moved higher through Tuesday's trading session in London, at 15:30 the currency pair was 0.53 pct higher at 1.2473.

The pound dollar exchange rate is 0.31 pct up on yesterday's close at 1.5533.

The pound Australian dollar exchange rate is unchanged at 1.5698.

Good news for the pound sterling came this afternoon in the latest National Institute for Economic & Social Research (Niesr) GDP reading.

According to the Niesr, the UK economy grew by 0.1% during in the three months to the end of May, after shrinking by 0.1% in the three months to end of April.

Thus, the UK would be out of recession. Just.

While the news on the UK economy is welcome, it is the broader risk-on / risk-off environment that will continue to determine value for the UK currency.

The fragility of the manufacturing sector has been all to evident in the second quarter and this leads James to speculate that the UK economy may be in a deeper recession.

Should this be the case the Bank of England could consider resuming the asset purchase program next month.

No doubt the Niesr news will help sentiment on this front.

BoE policy maker Adam Posen was speaking on Monday and said that he regretted withdrawing his recommendation for additional stimulus in May. The figures this morning showed that factory output dropped 0.7% from May, despite expectations of a modest 0.1% drop.

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