Sterling’s recent run against the US Dollar over?

July 25, 2013 in Forex Articles

Britain’s recovery picked up  in the second quarter, official figures have confirmed, with GDP expanding by 0.6% which was the expected figure, so no surprises but the growth rate is double the previous quarter figure. The 0.6% rate of growth was the figure predicted by economists. There have been signs of a pickup in retail sales but margins have been hit. The Office for National Statistics said that all sectors of the economy saw growth between April and June. Both industrial production, and the key services sector, expanded by 0.6%, the ONS said, with construction – which has been a heavy drag on the economy in recent quarters – picking up by a healthier than expected 0.9% helped by incentives from the UK government.

Sterling fell back sharply against the US dollar after the release of the figures, having been above 1.5380 before the GDP announcement the pound quickly fell to 1.5330 and is currently at 1.5320. Sterling had had a very strong run from 1.48 USD to close to 1.54 USD in the last three weeks. Today’s confirmation of the GDP figures from the UK, although good that it is the first time since 2011 that the UK has seen back-to-back quarterly increases, after a 0.3 per cent rise at the beginning of this year. The figures are still on the low side especially when compared with U.S GDP figures. The decline in Sterling soon after the announcement of the figures will probably continue and it would not be a surprise if the 1.50 USD level is breached possibly within the next couple of weeks. The new Bank of England governor Mark Carney is known to want Sterling to depreciate and want the UK to become more of an export oriented economy and boost exports.

Comments are closed.