Strong UK Growth May Trigger EURGBP Slide

 | Jul 28, 2014 06:28AM ET

Background:

The International Monetary Fund (IMF) says in its latest assessment of the global economy that the United Kingdom (UK) is growing at a faster pace than every other major developed country. The IMF upgraded its forecast for UK growth to 3.2 percent this year and 2.7 percent in 2015.
With just 9 months and 9 days to go until the next UK general election this news will be seen as underscoring the success of the coalition’s macroeconomic strategy.
The IMF's upgrade marks an increase in the economic assessment of the UK by 0.4 percent in 2014 and 0.2 percent in 2015 since the previous forecast in April. It was also the largest upgrade of any major western economy for both years.
The chancellor of the exchequer, George Osborne commented…
“…The IMF has upgraded their 2014 forecast for the UK by more than any other major economy. The government’s long-term economic plan is working. But the job is not yet done and so we will go on making the assessment of what needs to be done to secure a brighter economic future. …”
In contrast, the IMF said the Eurozone area will grow by a paltry 1.1 percent this year and just 1.5 percent next. Most of this will come from Germany whilst France and Italy will not contribute much at all and both have suffered strong downgrades since April.