Last week China posted growth of 7.6% in the June quarter down from 8.1% the previous quarter showing that the Chinese economy is still healthy. Since the global economic crisis this is the first time that Chinese growth has dropped below 8% but with figures still very high it is likely that the economy will have a soft landing. The Australian economy has avoided many of the problems from the current global crisis affecting US, Europe and the UK. This has kept the Australian Dollar strong against Sterling and it economy is remaining buoyant owing to the mining sector which is mainly driven by Chinese demand. This latest round of data from China should keep the Australian Dollar relatively strong against the Pound but as we move further into the year keep a close eye on Chinese GDP data as any signs of a slowdown keep see Sterling strengthen against the Australian Dollar.
A forecast published by Ernst & Young has claimed that falling inflation and a pick up in consumer spending could see the UK economy grow by 1.6% next year and 2.6% in 2014. This is clearly a long way off but at least we may see light at the end of a very long tunnel. However, as far as this report’s impact on foreign currency exchange rates I would be surprised to see any movement.
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