Uncertainty is the market’s worst enemy as bean counters love to know what to expect in the short term at least. So the US heading towards yet another budget showdown this afternoon and with no resolution in sight the rest of the world suffers as it waits.
In Italy the coalition seems to be on the edge of collapse as five ministers from Silvio Berlusconi’s party removed themselves from the coalition in protest of the proposed hike in VAT. Italy’s borrowing costs have rocketed, unemployment is rising and the economy is set to decrease by 1.4% this year. This has seen the Euro fall against safe havens such as the Swiss Franc.
Meanwhile in the UK the Governor of the Bank of England Mark Carney has ruled out any more QE (quantitative easing), as he states that the economy has “strengthened and broadened,” pointing out his believe that not only has we turned a corner but are developing a more balanced economy going forward.
All the resulted in the pound gaining 1c to 1.6132 against the dollar on Friday.
