Pound Outlook Shaken By GDP

Jan.26.2010

Britain’s initial GDP read for the fourth quarter is very weak, and the revised versions can easily erase it, says Yohay Elam at Forex Crunch. Catch Yohay, and TheLFB trade team on ForexTV Live.  

The Pound reacted with a fall against the dollar and the Euro. Here’s a review of this important event and a look forward on the Pound.

Britain’s first release of GDP was very weak – only 0.1%. Early expectations were for a rise of 0.4%. The unofficial NIESR GDP estimate expected a weaker outcome, only 0.3%, but it was even worse.

The UK has been lagging behind other economies with an ongoing recession that went into Q3. The US and Canada exited recession in Q3, Germany and France in Q2. Australia never experienced recession. There were high hopes for a celebration, as Britain was expected to align with other countries.

An initial print of 0.1% can be easily erased in the second and final prints. A revision to 0% growth or yet another quarter of recession are possible as they are within the margin of error. Another quarter of recession is terrible for the Pound.

Hope can be found in the fact that the contraction in Q3 was upgraded from -0.4% to -0.2%, so maybe the final growth rate for Q4 will be better. But today’s release is definitely bad for the Pound. Full Article…