Pound Sterling (GBP) Exchange Rate slows rise as current account widens unexpectedly

The Pounds rise against the US Dollar and Euro slowed on Friday after data showed that the UK’s current account deficit was far bigger than economists had been expecting in the fourth quarter of last year.

According to the Office for National Statistics (ONS) the current account deficit between October and December 2013 was £22.4 billion, down from the record of £22.8 billion seen in the preceding quarter. Economists had been expecting the deficit to be £14 billion.

The ONS blamed the deficit increase on a fall in income from investment abroad as a result of the strong Pound and from the UK’s trade deficit.

Sterling remained supported however as the ONS also released the latest GDP figures for the UK. As expected the nation’s economy expanded by 0.7% in the final quarter of last year. GDP for the full year however was revised downward to 1.8% from the previous estimate of 1.9%.

Against the Euro the Pound breached the 1.21 level as the single currency continued to be weighed down by European Central Bank comments that it could introduce measures to aid the Eurozone’s weak recovery.

Also adding support to the Pound was the release of a separate report which showed that British consumer sentiment rose in March to its highest level since the financial crisis began in 2007. The ONS also said that the UK’s services sector got off to a solid start in 2014 as it grew by 0.4% in January.