Currency Update – UK GDP

Sterling has tumbled this morning following the release of UK GDP figures which were much worse than analysts had expected. The shock numbers showed that the UK economy shrank by 0.5% over the last 3 months of 2010.  The severe weather seen in December dramatically hit GDP, particularly in the construction and service sectors. However, according to The Office for National Statistics, even if the impact of the poor weather was excluded, economic activity would have been ‘flattish’.

The governor of the Bank of England is due to make a speech tonight, whilst the minutes from the previous Bank of England Monetary Policy Committee (MPC) meeting will be released tomorrow at 09:30. Recent calls by some economists and in particular MPC member Andrew Sentance to increase interest rates in the face of above target inflation will now be weakened.

Currently the Pound trades in the region of 1.57 against the US Dollar and at 1.15 against the Euro.

Given current market volatility, please do not hesitate to contact Currency Matters to discuss any foreign currency exchange requirement. Currency Matters can provide a number of products including Forward Contracts and Stop Loss/Limit Orders which can help you manage your foreign currency exchange risk.

The exchange rates mentioned in the above blog are based on the current interbank rate. Please do not hesitate to contact the dealing team on +44 (0) 1695 581 669 for a live quote.