httpvh://www.youtube.com/watch?v=Gnz-iJOG9Yc

It seems that the Royal Wedding gave the UK economy the boost it needed in April, but they key will be whether this strength can last or if we need Harry to get on with proposing to his intended, whoever that may be, sooner rather than later! Unfortunately this improvement is likely to be seen as a bit of an outlier figure as the mood on the High Street is still rather bleak, as typified by the announcement of the closure of 110 Mothercare stores which was announced on Wednesday. It seems like the saccharine hit the wedding gave TV viewers on the day itself, unfortunately the cheer is unlikely to last. You can see my interview with the BBC on the subject here

After the announcement we expected to see market participants use this spike as an opportunity to further bet against the UK recovery via bets against the pound and gilts and the near term jump higher for the pound has faded unfortunately, mainly against the euro. It seems that the market was particularly put off by the growth downgrade in the Bank of England’s Quarterly Inflation Report published last week that suggested growth in the UK would dip to 1.9% from a previous expectation of 2.2%. This fear is all over communications from the BOE now, especially since the departure of Andrew Sentence, the key voice for rate hikes has left and leaves GBP in a bit of quandary as we bear down on the summer doldrums.

Elsewhere in the world of currency EURUSD continued its slow grind higher, regaining the 1.43 level with the dollar weak against most of its crosses. The US 2yr yield slipped on the poor data from the states yesterday although there was also negative news for Spain as a bond auction held yesterday failed to live up to expectations. The country sold EUR3.2bn in 10- and 30yr bonds, less than the EUR4bn that was expected. Other periphery debt (Portugal and Greece) fell on the news.

The data calendar is quiet today

Have a great weekend.

Latest exchange rates at time of writing