The European continent is still releasing important fundamentals after last week's top news from the euro zone, this week the UK will announce interest rate for September, where expectations refer that both borrowing cost and APF quantity will remain unchanged.

In the second quarter, the revised gross domestic product rose to 1.2% from 0.3% in the first quarter, and on the annual basis the expansion inched up to 1.7% from the advanced reading of 1.6% and this refers to the strength and strong pace of growth in the second quarter, which despite its peaked and in may decline again for many reasons.

At the domestic level, credit operations are still showing weakness as banks are still building capital, and at the same time the country is witnessing the rise in the overall level of prices while labor market is weak.

In addition, one of most important government decisions in June was the announcement of the largest spending cut plan which will resume for five years to reduce the budget deficit that reached 11.1% of GDP in 2009 and is among the highest in the European Union. Thus, such actions are expected to negatively weigh on the British economy and thereby could delay the achievement of strong growth levels or even return the country back into recession.

At the global level, the euro area, the UK main trading partner, and the United States as well as other global economies such as China are experiencing slower economic growth and this in turn will adversely affect the pace of growth in the British economy.

In the latest inflation report released by the BoE, growth forecasts for 2010 were cut to 3% compared the previously estimated 3.6% as a result of the expected slowdown in the pace of global economic growth in the second half of this year. In addition, economic conditions have not stabilized yet in the country.

On the other hand, the British Chamber of Commerce has raised its forecast for British economic growth during the current year, referring that the economic growth rate would reach 1.7% by the end of 2010, where these expectations come in line with the growth figures achieved by the economy in the second quarter.

Still, the bank is keeping the same monetary policy since March 2009 as still interest rate at its lowest level since the establishment of the Bank at 0.50%, while the APF program is still at 200 billion pounds.

Andrew Sentance, a member of the Monetary Policy Committee, is still sticking to his position in terms of raising interest rates and start withdrawing stimulus plans from the market to address the risks of escalation in inflation. It is clear that the general direction of the Bank is towards boosting growth, and thereby will probably keep stimulus till at least next year.

According to statements by King, the Bank needs more time to raise interest rates to normal levels that existed before the crisis, and will not change monetary policy as the British economy still needs more support to boost the infant recovery.

In the euro zone, the ECB will release monthly bulletin which will mainly cover details announced by Trichet last week, where the ECB left interest rate unchanged at 1.00% and will continue loan offering into 2011. In addition, the bank raised both growth and inflation forecasts.