The UK’s Sterling exchange rate saw a big boost higher in trading this morning against all world currencies after Q1 2013 forecasts suggest that UK GDP data would show that the British economy grew slightly in the first quarter, avoiding a triple dip recession.
Latest UK Sterling Rates
As of 10:17 GMT this morning, 1 pound Sterling GBP bought 1.18100 euros, or 0.69 percent higher and against the US dollar GBP bought $1.54350 or a massive 1.10 percent higher.
Avoiding a Triple Dip?
Given growing expectations that the UK has escaped a triple dip recession, analysts and traders said that UK Sterling was likely to see a more pronounced reaction if the data showed a fall in UK GDP.
“There’s been a bit of squaring of short sterling positions ahead of the GDP data. Everyone’s been a bit pessimistic about the UK recently and if the data is a bit stronger then we could get a knee jerk rally,” said Richard Wiltshire, chief FX broker at ETX Capital. And it seems that this may well be the case today.
However analysts also believe that the pound would still remain vulnerable to a more pronounced reaction if the economy is shown to have contracted, because the balance of expectations was that the UK would not slip back into recession.
“There’s a surprising confidence in the market that UK GDP will rise by 0.1 percent or better. Even if it is a flat reading I think sterling will take a battering and fall by at least a cent,” said Richard Driver, analyst at Caxton FX.
The Latest Data
According to the ONS (Office of National Statistics) the UK economy expanded 0.6 percent in the first quarter of 2013 from a year earlier, compared to expectations for a 0.3 percent increase. The UK economy expanded at an annualised rate of 0.2 percent in the preceding quarter. The ONS said the largest contribution to the increase came from the service sector, which grew by 0.6 percent in the first quarter of this year.
Original post:
UK Sterling exchange rate sees big boost higher on Q1 data forecast
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