Sterling surges as UK economy returns to growth

Andy Scott, premier account manager at foreign currency exchange brokers HiFX, comments: "Sterling gained across the board Wednesday after the release of much better than expected GDP growth figures for the 3rd quarter which showed the economy grew at 1%. This was above even the most optimistic forecasts for the three months which included the impact from the Olympics. This brings to an end the double dip recession that had gripped the UK for the last nine months and will provide a ray of economic light in the autumn dim.

"Sterling stopped just short of 1.24 against the Euro having hit a 5 ½ month low at the beginning of the week and moved above 1.61 against the US Dollar having hit a 1-month low this week.

"These are the best growth figures since 2007 and even if you strip out the forecasted contribution of 0.3% from the Olympics, the figures are very positive. The employment situation which has been improving now for several months despite the economy being in recession makes a lot more sense with the growth registered in Q3. This must now pretty much kill any expectations that the Bank of England will announce more monetary easing when they meet next month which should benefit Sterling against many major counterparts whose central banks are pumping money in, or cutting interest rates

"Whilst the Governor of the Bank of England reminded us this week that he expects the GDP numbers to remain choppy, we can only hope this is the beginning of the recovery and that more positive surprises on the economy await."