GDP revision due today

27 March, 2013

Tom Arnold

Unfortunately the Pound is continuing to struggle despite last week’s positive retail sales figures, with rates against most of the major currencies at very low levels, in some cases not previously seen for some years.

This morning’s UK GDP data release is unlikely to change this, with the consensus being we will see a negative figure of -0.3%. This will weigh very heavily on the Pound and could see rates dip considerably. The figure will be released a couple of hours before this week’s Prime Ministers Questions and is likely to provide the opposition with an even bigger stick than normal to beat the government with. Growth has been a massive point of contention for the government in the last couple of years, with Labour constantly calling for a turnaround in economic policy to try and generate some growth at the expense of the austerity package we are currently experiencing. Fears over the fundamental path the UK economy is on, and whether it is working, will only add additional pressure to the Pound.

So UK GDP at 9.30 is critical…

The one area the Pound is doing quite well, is against the Euro. The single currency has been under extreme pressure ever since the Cyprus situation has come to the fore and despite an agreement being reached, fears that these tactics might be used in other Euro countries has lead to massive capital moves out of the Euro, which has been very negative. The Euro has also been hit by some slightly negative data, highlighted this morning by negative GDP in France.

So all in all, if you are buying any currency other than Euros then cross your fingers that GDP is a surprise and if you are buying Euros you should probably be getting in touch with your CI account manager before 9.30am to get your deal done.