Exchange Rates Today: UK Economy Suffers Terrible GDP figures, GBP is Set to Fall Against the USD

Modified: Wednesday, 25 July 2012 13:52 BST - Written by Ben Hughes

STORY LINK Exchange Rates Today: UK Economy Suffers Terrible GDP figures, GBP is Set to Fall Against the USD

The British economy has contracted by 0.7pc during the second quarter - representing the largest quarterly contraction since Q1 2009.

Earlier the Pound made dips against the Euro and Dollar ahead of the release of today’s GDP figures for the second quarter. Weak economic data out of the Eurozone and America has seen Sterling firm its position against both currencies. Against the Euro which has been dented by concerns Spain may need a full bailout, sterling strengthened 0.4 percent to 77.85 pence per euro, taking it close to a more than 3-1/2 year high of 77.56 pence touched on Monday.

Consistently negative data coming from the Western nations could easily see investors heading to safer havens which will lead to a weakening of the Pound. Thanks to the terrible GDP data we can expect the Pound to embark on a downward trend as fears over the UK economy are sure to have a negative impact on the currency.

The ‘Greenback’ continues to make gains against a basket of currencies as it once more takes its place as one of the leading safe haven currencies. The Dollar is expected to rise against the Pound thanks to weaker than predicted GDP data and will continue to make gains against the Euro as the single currency continues to take a kicking.

In overnight trading in the Asian markets the Euro came close to striking a two year low against a basket of currencies. Traders are avoiding the single currency as fears over that debt-ridden Spain will be in need of full scale bailout. Record high borrowing costs for Spain and the belief that Greece has very little chance of meeting the terms of its bailout have fuelled concerns over the Euro regions stability. The credit rating agency Moody’s has also not helped the situation by cutting the ratings for Germany, Holland and Luxembourg.

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