Currency Exchange UK

 

Sterling Falls on Euro Boost and UK GDP Data

Sterling Falls on Euro Boost and UK GDP Data

An interesting morning on the foreign exchange market this morning, as a number of factors caused movement for the pound and the euro.

The pound had originally been expecting a rise today, as investors speculated that the latest UK GDP data would be at around 0.4 per cent.  

After a round of positive data on the UK economy, most analysts supported the expectation that growth would be at the same rate as in the fourth quarter.

However the official data was worse than expected causing what foreign exchange insiders referred to as “initial selling” in the pound.

One of the main causes for the weaker-than-expected GDP data was the harsh winter, which led to slow retail sales in January and low industrial production.

Meanwhile the euro enjoyed interest this morning on the markets after Greece announced that it will be accepting the large bailout plan which has been prepared by other EU nations. 

In the past weeks, Eurozone leaders and the IMF agreed on a package of around €60 billion, which would be loaned to Greece at an interest rate of around 5 per cent.  Initially, Greece said that it hoped it would be able to cope with its massive deficit alone.

Yet after the EU found that the budget deficit in Greece is in fact even worse than expected, Greece finally relented and decided to accept the loan.

Investors showed what could possibly be initial interest in the euro – whether or not this will extend to the long-term remains to be seen.  Currency analysts warn that the IMF’s involvement in the bailout could eventually force back the euro.