Sterling Digest, April 25 2012: market follows central bank not economy

Mark Prisk, UK Business Minister

UK companies are backing a new Government campaign to highlight the best of modern British manufacturing at an exhibition during the Olympic Games. Will it work?

It was the hawks versus the doves of the BoE and today the hawks won. Even with the UK falling into a double-dip recession, the BoE has already told the market that the economy is actually stronger than the number would reveal. They are ignoring today’s GDP release. And the market followed suit with new yearly highs. We noted yesterday that any sterling weakness on the back of a disappointing GDP number would be temporary. Coupled with Bernanke keeping the door open for QE, $GBPUSD bulls remain well supported above 1.60.

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