By Marc Morley-Freer, Smart Currency Exchange
Recently the FTSE 100 share index has closed out at levels not seen for five years showing that there is still confidence in the UK economy, although how long it can carry on the Bull Run is anyone’s guess. So is the UK and global economy on the mend?
I wrote a few weeks back that UK Plc was showing ‘green roots of recovery’. This week is very important for sterling as we see Manufacturing, Construction and Services PMI data released that, by Wednesday, will set the tone for the currency markets in the near term. Better than expected PMI data this week is sure to see sterling gain on its European and American trading pairs.
On the back of poor European data on Friday where German retail sales faltered and came in less than expected - and the unemployment rate across the Eurozone rose to 12.2% compared to the UK’s 7.7% - sterling clawed back its losses from Thursday gaining 0.5c in early trading.
So with further positive GBP news we could see more currency strength, although forecasters think any gains will be short lived as it is unknown what effect Mark Carney will have when he comes to the helm of the BoE on July 1st. If you are in the market to sell GBP, taking advantage of any short term upside could well be advisable.
Staying in the UK, it has been reported that you have a better chance of getting money out of the big four banks if you are applying for a residential mortgage than if you are a SME looking for a business loan.
The government’s Funding for Lending Scheme headline numbers would seem to show a success - but when you lift the covers and look into who is actually getting the money, it’s a different story.
Despite all the positive rhetoric from the banks, SMEs are still finding funding incredibly difficult with many reporting additional red tape and unrealistic lending terms the main barriers. Supporting this was the news that first quarter data showed SME borrowing at its least for two years.
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