Finance

Sterling little changed by Britain’s 4.8% GDP growth in Q2

Sterling edged lower as analysts expected the Bank of England to make no imminent moves in its monetary policy after official data showed Britain’s economy grew in line with expectations in the second quarter. The Office for National Statistics said that the economy grew by 4.8% in the second quarter. Sterling was little changed and slipped 0.2% versus the dollar at $1.3835 by 1526 GMT after rising in the previous session. This interrupted a 3-day losing streak versus the greenback.

The pound traded just off 18-month highs touched and was 0.2% lower on the day. This is by changing hands at 84.83 pence. ING analysts said that it was unlikely that the GDP data would move the needle on the BoE story. Stuart Cole, head macro economist at Equiti Capital in London, said that for sterling, while the economic landscape continues to provide solid support, it does suggest further topside progress will be slow. He also added that it is quite likely that the pace of growth has already peaked. In recent weeks, sterling has outperformed. This is because the COVID cases have fallen and high vaccination rates allowed the British government to lift most of the rules.

GBP investors will be looking for direction in forthcoming UK data releases. Jane Foley, head of FX strategy at Rabobank commented that, it is to gauge whether there is risk that the BoE could extend the hawkish element, further in the months ahead. Analysts said that the BoE tone was slightly hawkish last week, when its monetary policy committee voted 7-1 to maintain the pace of its government bond-buying.

Finance

Euro zone ministers expect inflation to slow in 2022

The acceleration of euro zone inflation, driven energy prices, is mostly temporary. Then the price growth will slow down again. The euro zone finance ministers agreed that, that too the next year as forecasted by the European Central Bank and the European Commission.

Paschal Donohoe, chaired the talks of the ministers in Luxembourg. In a news conference he said that there was also agreement that the inflation spike was not an argument against the transition to renewable sources of energy. This is under the EU’s ambitious plan of reducing CO2 emissions to zero by the year 2050.

Finance

Under new rules, borrowing for investment sensible

British finance minister Rishi Sunak said that the government borrowing to fund investment was a sensible thing. This is to allow under new fiscal rules that he is likely to announce, unlike borrowing for day-to-day spending. He said that borrowing for capital investment that is going to drive up their growth is probably a sensible thing for them. And that too particularly in an environment of slightly lower interest rate. Sunak stated this in an event on the sidelines of the annual conference of Britain’s ruling Conservative Party. This event was organized by the Taxpayers’ Alliance advocacy group. Sunak stated in that event, that borrowing for more day-to-day spending is probably less something that you would want to have as part of your framework.

Finance

IMF board to interview Georgieva-sources

The International Monetary Fund’s executive board is going to interview Managing Director Kristalina Georgieva. This is regarding that; its reviews claims that she pressured World Bank staff to alter data to favor China in her previous role. Board members were initially expected to meet with Georgieva. But spent their time working on other regular business matters.

The board members spent hours for questioning lawyers from the WilmerHale firm. This is about their World Bank investigation report which alleged that Georgieva, as the bank‘s CEO applied undue pressure on staff, to alter data in the flagship “Doing Business” report to benefit China. Then, an IMF spokesperson said that the IMF board remains committed to a thorough, objective, and timely review of the matter. Georgieva has strongly denied the accusations.

The upcoming interviews could prove pivotal in either increasing support for Georgieva. This is with many IMF shareholders are keen to wrap up the board’s deliberations on the matter. The fund’s most influential member governments, including the top shareholder the United States, have withheld public judgment. The World Bank tasked WilmerHale with investigating the “Doing Business” data irregularities identified in 2020. The law firm’s report contends Georgieva. The former World Bank President Jim Yong Kim’s office pressured staff to manipulate data so that the China’s global ranking in the “Doing Business 2018” study of investment climates rose to 78th from 85th.