The pound managed to fall across the board yesterday after data showed that UK consumer confidence fell for the third month in a row in August and is now at a level not seen since the height of the 2008/9 financial crisis and the turbulent early months of 1990.
Nick Moon, managing director of GfK NOP, which compiled the figures, said that on both these occasions the decline in consumer confidence mirrored a slide into recession.
“With an increasing number of indicators suggesting the economy is either stagnating or returning to recession, the continuing loss of consumer confidence is a major worry for the government,” Moon said.
In the euro zone, a European Commission survey said economic sentiment in the euro zone tumbled to a weaker than expected 98.3 in August from 103 in July. In addition, ratings agency Standard & Poor’s (S&P) lowered its growth estimates for the euro zone but signalled that it will not dip back into recession. S&P now expects gross domestic product in the single currency region to grow by just 1.7% in 2011 and by 1.5% in 2012. In another sign of a potential ‘double dip’, S&P suggest that Germany, by far and away the biggest economy in the euro zone is expected to grow by just 2.0% in 2012, significantly under the previous estimate of 2.5% and the 3.3% growth expected for this year.
The euro eased against the dollar but managed to hold on to the gains made against the pound.
Meanwhile, in the US, the minutes from the Fed’s last meeting showed that several officials had considered taking fresh measures to breathe life into the sluggish US economy.