In trading yesterday the pound picked itself up from 6-month lows against the single currency, gaining 0.7% as positive data buoyed investor sentiment.
- In a final revision, Britain’s second quarter GDP figure was reported as -0.6%, up from a previous revision of -0.7% and strengthening claims that the UK will exit recession in the third quarter.
- There was also positive data from the UK CBI retail sales index, which showed considerable improvement from last month, reaching levels well above expectations.
- Additionally, lending to individuals rose in August, reflecting both an increase in the willingness of high street banks to extend credit, and also improved consumer confidence in the market as they begin to take on more debt.
- In the evening, it also emerged that the BoE may not be planning to lower interest rates, backtracking from King’s recent comments, and enhancing the pound’s yield appeal.
- Sterling fared well following the day’s news, but its gains were capped as it was also revealed that the U.K.’s current account deficit widened in the second quarter to its largest level for nearly two years, as investment income narrowed.