UK businesses are getting more confidence

The Confederation of British Industry’s most recent quarterly survey, covering the three months to the start of September, puts British business confidence at its highest for nearly seventeen years.

The consequences for forex trading are likely to be an increase in confidence in the pound and a strengthening of its value against the US dollar, which has already been weakened by the US government shutdown.

The CBI survey, conducted with PricewaterhouseCoopers and involving 99 British companies, found that 59 per cent of companies were more optimistic about the future, against 6 per cent who said they felt less optimistic. There was also a majority (by 24 per cent) of firms who said they had increased staffing levels during the quarter, and a net 14 per cent of firms said that they believed they would be likely to take on more staff during the next three months.

The only negative aspect of the CBI survey was an indication of a decline in business volumes, but this is not unusual during the summer quarter and should not be seen as detracting from the overall positive message of the survey. A net majority of firms anticipated a rise in business volumes during the autumn quarter.

Investors interested in currency trading online should be aware that the relationship between business confidence and exchange rates can be complex, as firms involved in exporting regard a rise in the value of their trading currency as a threat to profitability. However, inward investment, which is a likely concomitant of improving confidence, is linked to a demand for currency.

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