The Pound posted modest losses yesterday in response to the Bank of England’s Financial Stability Report, although the British currency was able to advance modestly on a broadly softening US Dollar as speculation regarding Federal Reserve Stimulus continues.
The Pound Sterling Exchange Rate was in the region of 1.1726 against the Euro as of 10:10 GMT
1 Euro is currently worth 85.12 pence
BoE policy maker David Miles triggered Pound declines by asserting that, despite the positive UK data which has been seen lately, the economy still needs the fiscal support of increased asset purchases.
Prior to the publication of the UK’s gross domestic product report for the first quarter, the Pound was little changed against the Euro and US Dollar
Initial GDP estimates were for quarter-on-quarter growth of 0.3 per cent and year-on-year growth of 0.6 per cent in the first three months of the year.
Before the final figures were released industry expert Lee McDarby commented: ‘If the GDP numbers come out as forecast we might see the Pound firm up a touch. To get a big move in the Pound, you’d have to see a shock in the numbers.’
The latest figures showed that QoQ growth met estimates, but the UK economy actually only expanded by 0.3 per cent YoY, 0.3 per cent lower than expected.
However, the UK statistics office also revised GDP figures for 2012 and it now appears that the economy actually stagnated in the first quarter of last year and did not shrink by 0.1 per cent as stated previously. This means that the UK narrowly avoided a double-dip recession last year, but the revised 0.5 per cent fall in second quarter GDP was bigger than first estimated.
The Pound to Euro Exchange Rate hit a low of 1.1735
Sterling also slid to a three-week low against the US Dollar
Meanwhile, a separate report showed that disposable income in UK households plummeted by 1.7 per cent in the first quarter compared to the previous three month period. This is the biggest decline for 25 years.
The drop can partly be attributed to decreasing wages.
In response to the data economist Vicky Redwood commented: ‘Despite the recent optimism flowing from the better economic news, the recovery still faces an uphill struggle to regain momentum given the continued drag from the public sector. The onus still falls heavily on monetary policy to support the recovery.’
The Pound weakened against the US Dollar and Euro as the European progressed and additional fluctuations could occur later today in response to US news.
Current Pound Sterling (GBP) Exchange Rates
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5295 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1726 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6429 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9575 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6540 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8512 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6080 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5107 >
(As of 10:10 GMT)
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