Sterling Exchange Rates Following UK GDP Figures

This morning we have heard the latest revised figures of the UK’s GDP figures for quarter 1 of 2014 which is a key figure in determining the performance of the UK economy. A strong GDP figure shows growth in the economy and recently we have been seeing a lot of positive economic data which led to the belief that the countries GDP figures would continue to improve over the course of the year. The figures released today have shown that the economy grew by 0.8% and while this is another improvement on quarter 4 of 2014 it was not as high as had been anticipated and as a result Sterling dropped slightly against some of the major currencies with GBP EUR exchange rates heading down below the 1.21 level on the mid market rates and GBP USD falling below the key 1.68 mark.

Before every data release the currency markets price into them the expected reaction and so in this instance we saw the Pound push up in very early morning trading as the expectation was for a positive reading so when the news was not quite as good as had been hoped it actually lead to that improvement this morning being lost and a negative trend being created. However, this may be short lived as the GDP figures should not be discounted as being bad, far from it, it is yet another sign that the economy is improving and we are on a strong recovery path although this recovery may not happen as quickly as some would like. Tomorrow we have the important Eurozone inflation figures which if show yet another drop could lead to calls for the European Central Bank (ECB) to act to prevent deflation, whether this is through a change in interest rates or via other financial measures. So, a low rea