A Sterling Effort For UK Growth

26 April, 2013

Simon Eastman

If there was other news on Thursday, it was fairly irrelevant in the currency markets, as after months of speculation over the UK economy and whether we would enter a triple dip recession, the wait was finally over. As 9.30 struck, traders were staring at the screens for the all important UK Q1 2013 GDP figure in anticipation…

It didn’t disappoint. Having been estimated earlier in the month at a 0.1% growth figure, and before that, at possibly negative, the actual reading of 0.3% was a major boost. The pound spiked immediately, gaining a percent against most major currencies in seconds as the news was digested. The year on year figure doubled from an expected 0.3% to 0.6%, bringing the markets, George Osborne and the UK as a whole some respite from the doom and gloom. It’s thought the recent positive services sector was the main catalyst behind the growth so the question is, will it continue? This was of course only the first reading, so we have another two months of figures to go before it’s a definite we’ve not entered triple dip, but it’s a good start.

Elsewhere, across the pond there were a few releases as the US markets opened regarding jobless claims which were of little note. The talking point was the continued rise of the pound, which continued its gains as Wall Street jumped on the sterling band wagon. We finished the day up a cent and a half against the euro and nearly two cents against the US dollar.

So will the pound be able to keep up the momentum? Friday sees no data releases for the UK and some money supply data from the Eurozone, while across the pond it’s the US’s turn for GDP along with consumer consumption figures.

Will we see end of week profit taking on sterling positions and see a correction to the pounds gains? Certainly a question to consider if you have a currency transfer to make in the coming days. As yesterday proved, fluctuations can be large, but unfortunately they’re not always in the right direction so give one of the brokers at Currency Index a call for some friendly guidance on any transfers you may have to make.