The Pound softened against the Euro, US Dollar and other major peers on Tuesday as the latest Gross Domestic Product data for the UK came in just below economist expectations.
Official data showed that the UK economy expanded slightly slower than forecast in the first quarter of the year but the year-on-year rate of growth was the best seen in more than six years. The data also showed that there is still a long way to go before the economy returns to the peak levels seen before the start of the 2008 recession.
According to the Office for National Statistics, GDP rose by 0.8% in the first part of 2014, an improvement on the previous figure of 0.7% but below economist forecasts for a rise of 0.9%. Compared with the same period as last year the UK economy grew by 3.1%, the biggest rise recorded since 2007.
“Today’s figures show that Britain is coming back, but we can’t take that for granted. We have to carry on working through our long term economic plan. For the first time in a decade all three main sectors of the economy- manufacturing, services and construction- have grown by at least 3% over the last year. The impact of the Great Recession is still being felt, but the foundations for a broad based recovery are now in place. The biggest risk to economic security would be abandoning the plan the plan that is laying those foundations,” said Chancellor George Osborne.
Despite the data coming in just below forecast pressure upon the Bank of England to raise interest rates is likely to increase. Unemployment has already dropped below the 7% target set by the bank. GDP is expected to continue to be positive for the rest of the year.
Against the Euro, Sterling fell to a two-week low as the single currency remained supported by expectations that tomorrows highly anticipated Eurozone inflation data will show an improvement. A rise in the inflation rate will ease pressure on the European Central Bank to introduce additional monetary stimulus measures and send the Euro higher.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6808 ,
Pound Sterling,,Euro,1.2114 ,
Pound Sterling,,Australian Dollar,1.8154 ,
Pound Sterling,,New Zealand Dollar,1.9704 ,
US Dollar,,Pound Sterling,0.5949 ,
Euro,, Pound Sterling ,0.8250 ,
Australian Dollar,, Pound Sterling ,0.5507 ,
New Zealand Dollar,,Pound Sterling,0.5074 ,
[/table]
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