Sterling has been boosted by the news that the UK’s economy is growing faster then expected.
Figures released by the Office for National Statistics this morning show that the market improvement in the UK for the second quarter of 2010 was 1.1 per cent, almost twice as high as the predicted 0.6 per cent.
The news immediately boosted investors causing a surge in the pound.
Tom Hampton, currency analyst at Caxton FX says, "Following the announcement, sterling jumped up across the board. Sentiment that the UK economy is pulling out of recession better than most is growing, and as countries like the US continue to publish poor economic data, the pound will continue to benefit"
"Sterling and the euro are seemingly leading the way in the global recovery as positive GDP data from the UK and solid manufacturing and service data from the eurozone far outstrip that from the US. Over the past couple of months, the US economy has stumbled and there is talk of a re-introduction of quantitative easing. Dovish sentiment from the Fed Chairman over the past couple of days in his Monetary Policy speeches has also added to America's woes."
There had been increased fears that Britain’s recovery was slowing but these latest statistics will please investors.
The ONS said the last time the UK had growth of more 1.1% in any quarter was in 1999.
George Osborne, said the figures proved his plan to cut the public sector was right.
He said: "In the Budget, I set out a plan to restore confidence in our economy by dealing with the deficit, starting this year, and to rebalance growth from the public to private sector.
"Today's figures show the private sector contributing all but 0.1% of the growth in the second quarter, and put beyond doubt that it was right to begin acting on the deficit now."
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