UK falls back into recession

25 April, 2012


This morning’s news that GDP fell in the first quarter of 2012 will not help the Pound’s prospects after a solid performance in recent weeks.

Official figures showed a 0.2% contraction in the economy in the first 3 months this year, which on top of a 0.3% contraction at the end of 2011, mean that we are now officially back in recession.

The Pound fell nearly a cent against both the Euro and US Dollar on the release this morning, although has recovered a little since, given that the US and Eurozone economies are in at least as much trouble as the UK.

The news has also reopened the debate on whether the Bank of England may extend Quantitative Easing in the coming months, which would also hurt the Pound. With exchange rates against many major currencies near or at their peaks in recent trading ranges, clients with requirements to send money overseas in the short and medium term may like to consider whether fixing an exchange rate now may prove to be a wise decision, particularly if economic sentiment swings back to the downside after such positive data in recent weeks.