Overview
Great Britain’s gross domestic product rose 0.1%in the fourth quarter after contracting 0.2% during the three-months through September as service-based activity and manufacturing expanded slightly to bring the region out of its longest recession on record, while the data fell short of economists’ expectations for a 0.4% rise. At the same time, the growth rate slumped an annualized pace of 3.2% during the three months through December, the Office for National Statistics in London said. Taking a closer look at the report, motor trends leapt 6.9%, while sewage and refuse disposal tumbled 3.3% to taper the advance.
Meanwhile, U.K.’s index of services widened 0.2% for the duration of the three months through November as demand at hotels and restaurants were accelerated by the global economic recovery, while the British Bankers’ Association’s index for home loans climbed to 45897 in December from a upward revision of 44965.
Forecast
Bank of England Governor Mervyn King announced last week that the U.K. faces “a long period of healing” as “at this very early stage of the recovery, it is particularly difficult to judge the medium-term prospects for the economy.” After today’s release, King stated that it’s wrong to expect too much of regulation, and added that now is not the time to raise capital requirements. Looking ahead, investors are weighing a zero percent chance that the BOE will raise interest rates at its next rate decision meeting on February 04th according to the Credit Suisse overnight interest rate swaps, as policy makers aim to encourage a sustainable recovery.
Market Reaction
Immediately following the dismal GDP release, the GBP/USD extended the overnight decline and went onto reach a low of 1.6107.
Read the trading the news report daily for a detail description of today’s most-expected news release. DailyFX analysts review the expectations, recent history, and illustrate how to trade it.
Written by Michael Wright, DailyFx Research
Questions? Comments? Email me at mwright@fxcm.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
