Weaker UK growth sees Sterling decline

29 May, 2015

Rob Bastin

Yesterday’s trading kicked off with a few UK releases that would ultimately set the tone for the rest of the day. Mortgage approvals were slightly improved from last month as were total business investment figures. These were however overshadowed by flat Gross Domestic Product that remained and 0.3% growth for Q1 of 2015 rather than confirming the expected increase to 0.4%. Following the announcement sterling lost ground against most major currencies with GBP/EUR and GBP/USD the most noticeable.

GBP/EUR looks to be failing the 1.40 level for the 4th time this year as the Greeks maintain their confidence of coming to a bail out agreement, and cracks begin to show in recent UK data with growth and inflation the 2 main concerns. The USD continues to regain the ground that it lost last month and investors start to bet again on an interest rate hike in the coming months. After a run of poor eco-stats in recent months, figures are starting to improve again for the US and yesterday’s Home Sales figures continued this positivity with April’s result up to 3.4% from just 1.2% in March.

Today it is the US that is again in focus with their latest GDP results to be released at 1:30pm. Forecasts are for an expected drop from 0.2% to a -0.8% on the year and if confirmed could undo some of the recent gains that that the USD has made. GDP for Canada will also be announced at the same time with improvement for zero to 0.2% expected. To discuss the potential of any of these releases further, please contact your account manager on free-phone 0800 043 2623.