News Column

Pound Declines After UK Q1 GDP Data

April 29, 2014



BRUSSELS (Alliance News) - The pound trimmed its early advance against other major currencies and fell in the early European session on Tuesday, as the nation's economy grew less than forecast in the first quarter.

The preliminary data from the Office for National Statistics showed that the UK GDP rose 0.8% on quarter in the first quarter, below the 0.9% rise forecast by economists. The economic growth was 0.7% in the fourth quarter.

The figure was lower than Bank of England's estimate of 1% growth for the first quarter of 2014.

GDP was 3.1% higher in the first quarter of 2014 compared with the same quarter a year ago, data said.

The Bank of England governor Mark Carney told that there are signs that the nation's recovery is starting to broaden out, but there exists considerable slack in the labour market.

"The Monetary Policy Committee is comfortable with the position we are at now," Carney said to Bristol Post today. "When we do begin to see increases in interest rates they will be gradual and they will be limited," he added.

Pulling away from an early high of 1.6847 against the greenback, the pound reached as low as 1.6793 when the data came out. The pound may challenge support around the 1.67 zone.

The pound eased back versus the yen with pair trading around 172.36, after having advanced to near 4-week high of 172.92 in early deals. If the pound continues slide, it is likely to find downside target around the 171.00 region.

The pound fell to near a 2-week low of 1.4770 against the franc, reversing from a high of 1.4830 hit a short while ago. The pound is poised to seek support at the 1.47 mark.

The pound reversed from an early high of 0.8225 against the euro and slipped back to 0.8259, its lowest since April 16. The UK currency is likely to find support around the 0.83 zone.

German preliminary consumer price inflation for April is due at 8:00 am ET.

The US S&P/Case-Shiller home price index for February and consumer confidence index for April are set for release in the New York session.



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Source: Alliance News


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