The UK Misses Decembers GDP Forecast and Sterling Takes a Hit!
To kick off the week the UK missed December’s GDP forecasts pushing the pound weaker to $1.2860 (0.7%). GDP contracted to 0.4% the biggest drop since March 2016 and the looming Brexit deadline plays heavy on trader sentiment. Sterling is currently trading at $1.28933 down 0.3% from last weeks $1.29356 after recovering from Thursday's low of $1.27764.
No-deal Brexit is likely to have significant negative consequences for the pound and we are seeing investors buy precious metals as a hedge. Longer term I would predict a recovery but what I am uncertain about is how long this will take. The development of new trade agreements and internal UK infrastructure to boost the economy will take time and test public patience.
In other currency news the Euro loses value as the ECB announces fresh round of loans. The euro reached an almost 2 year low with a decline from a 2014 peak of just over $1.24 down to $1.1231. The fresh credit available is an indicator the eurozone slowdown is deeper than initially thought and even large economies like Germany are a hair width from recession.
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