Our casual evidence indicates that government spending boosts gross domestic product during recessions. But we don’t really have a satisfying, formal, modern, rigorous, academic macroeconomic model that explains this fact.
The pound fell to the weakest level in a month versus the euro as a report showed the U.K. inflation rate stayed near a five-year low, adding to speculation the Bank of England will delay increasing interest rates.
Perhaps no sector is more manipulated by government action than foreign exchange and that has been particularly true in the last few years. But the return to normalcy may also bring back an honest carry trader.
Bank of England policy makers held three votes for the first time at their meeting this month as they debated introducing guidance on interest rates under new Governor Mark Carney, according to a central bank official.
Mark Carney placed jobless numbers center stage tying monetary policy to a 7% unemployment figure. With an economic recovery under way in the U.K., GBP's bias over the short- to medium-term is likely to be upwards.