The pound fell 0.3% against the dollar to $1.49, and also dropped 0.3% against the euro to 1.14 euros. Thankfully, the suggestion is not that the UK is somehow crashing catastrophically, but more that markets are pretty pleased with strong US jobs data that was revealed on Friday last week. Unemployment in the country hit a four-year low, with the numbers of people in work reaching better-than-expected height.
And to reinforce the point that the UK is not in freefall, company stock was pretty much unaffected by the flee from the pound, as the FTSE 100 actually gained almost 14 point. It suggests that investors are not necessarily viewing the currency fluctuation as a definitive sign of weakness in the UK economy.
However, the threat of recession has been looming for some weeks now as disappointing economic data and company figures for the last quarter of 2012 looked disappointing however you looked at them. Industrial figures for January (which will be released tomorrow) are expected to show ‘flat’ growth, and will only add to fears that we are indeed heading for the triple-dip.
There is a ray of light (albeit a slightly perverse one) where the drop against the euro is concerned, however. Italy’s sovereign debt rating has been downgraded by ratings agency Fitch to BBB-plus with a negative outlook, thanks to the hullaballoo caused by its unclear political future. It means that the stronger state of the euro could only be temporary and the poor reflection on Sterling will only last a few weeks…