Double-Dip Recession Data Hits GBP/USD
- A double-dip recession has been confirmed in Britain today as official stats revealed output fell by 0.3 per cent during Q1 2012. Household spending has dropped as incomes likewise declined.
- UK GDP fell according to the UK Office for National Statistics representing a general slowdown in economic activity; this was in line with the most recent estimate.
- The UK economy is therefore in a technical recession. This comes when two quarters of lower GDP are experienced in an economy and is attributed to the Euro-zone debt crisis.
- This scenario increases a likelihood that additional easing will be seen from the BoE (Bank Of England) in next Thursday’s monetary policy announcement. This is proving to weigh on sterling and GBP/USD is trading around the 1.5500 round number after moving as low as 1.5484 intra-day.
- Higher German unemployment data has likewise weighed on the pound as a risk of sentiment prevailed. The near term directional bias for GBP/USD is bearish heading into Friday 29th June. There is however potential for a positive “risk on” rally should events at the EU summit bring any market moving news.