All of the British newspapers were printing good-news stories today regarding the fact that the UK was set to officially come out of recession, in anticipation of positive GDP figures. However to everyone’s surprise, the figures were much worse than expected.

Analysts were expecting GDP to show an increase of 0.2%, but today’s figures (which admittedly are just a first estimate) showed that the UK economy actually contracted by 0.4% in the three months between July and September.

As a result of this news the FTSE 100 help up pretty well, and has actually gone up slightly since the news broke, but the British pound has taken quite a beating.

For instance the GBP/USD pair, which was as high as 1.6694 earlier today, is now around 340 pips lower at 1.6353 at the time of writing, which is a huge fall. Plus the pound has weakened against other major pairs as well including the Japanese yen and the euro.

So just when it looked like the GBP/USD was starting to recover, it now looks like it could be about to weaken even further on the back of this unexpected news.

 

 

Filed under: Market News

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