The Pound Sterling Exchange Rate was in the region of 1.1631 against the Euro as of 11:28 am
Even though the Bank of England’s recent inflation report stated that UK ‘expansion is expected to be weak by historical standards, mirroring the relatively subdued prospects for both global demand and the supply capacity of the domestic economy’ Britain could still avoid falling into a dreaded triple-dip recession.
According to a poll of economists the UK isn’t heading for its third recession in four years, as feared by some industry experts. The economy will just scrape by, even if the BoE holds off on initiating stimulus in the form of extra asset purchases.
The recent poll of 55 economists forecast that although the UK economy contracted by 0.3 per cent at the end of last year, in the first quarter of 2013 it will post modest growth of 0.2 per cent. The results showed a 35% chance of another recession occurring within the year.
None of the economists involved in the poll predicted contraction in the 1Q of 2013 while just six expect stagnation.
As a recession is defined as two consecutive quarters of contraction the UK will avoid its third if this prediction proves accurate.
Ross Walker, a UK economist with RBS and poll participant asserted: ‘We’ll miss it – narrowly. The underlying picture is not really affected by it. Where it does matter is if you were to get a negative print then it can weigh on confidence, certainly from a business investment point of view.’
Despite this more optimistic view the Pound still dropped against its American counterpart for a second day as yesterday’s BoE inflation report continued to wear on the British currency.
Earlier this week a report revealed that UK inflation held at 2.7 per cent. Consequently, the BoE negatively revised their growth and inflation forecasts.
This, plus the BoE’s pessimistic comments, caused Sterling to decline against peers including the US, Australian and New Zealand Dollars.
The British currency notably fell to a six-month low against the ‘Greenback’ yesterday, pushed lower by the strain of the upcoming sale of five-year notes worth 4 billion Pounds.
As fixed-income strategist Sam Hill asserted: ‘The Bank of England yesterday gave a message that it is going to accept inflation above target for the next three years and didn’t signal any tightening, so that’s put upward pressure on yields.’
The Pound was able to break free of a recent run of declines against the Euro however as the European currency broadly softened following several disappointing data releases for the 17-nation currency bloc.
Reports showed that French German and Italian GDP contracted by more-than-expected at the end of last year while the Eurozone’s recession deepened and Portugal’s unemployment levels hit historic highs.
In the fourth quarter of last year Eurozone GDP dropped by 0.6 per cent from the third quarter, the currency bloc’s worst economic performance for nearly three years.
Current GBP Exchange Rates
The Pound Sterling to Euro exchange rate is currently trading at 1.1631
The Pound Sterling to US Dollar exchange rate is currently trading at 1.5511
The Pound Sterling to Australian Dollar exchange rate is currently trading at 1.4997
The Pound Sterling to New Zealand Dollar exchange rate is currently trading at 1.8264
The Pound Sterling to Canadian Dollar exchange rate is currently trading at 1.5531
The Pound Sterling to Emirati Dirham exchange rate is currently trading at 5.6972
The Pound Sterling to Swiss Franc is currently trading at 1.4330
The Pound Sterling to Japanese Yen exchange rate is currently trading at 145.0400
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