Pound Sterling Fails To Capitalise On Positive NIESR Q1 GDP Growth Estimate

Published: Wednesday, 10 April 2013 09:00 BST - Written by James Fuller

STORY LINK Pound Sterling Fails To Capitalise On Positive NIESR Q1 GDP Growth Estimate

It looks like UK Chancellor of the Exchequer George Osborne’s Budget Statement prediction that the UK economy has avoided an unprecedented triple dip recession may have some legs. Osborne’s assertion that official figures will show that the beleaguered British economy had returned to growth during the first three months of 2013 was borne out by yesterday afternoon’s NIESR GDP growth estimate. The widely-respected think tank, which uses the Treasury’s own economic modelling software to generate its rolling quarterly growth prediction, forecasted yesterday that economic activity in the UK expanded by 0.1% during Q1 2013.

If the figure proves to be correct, (which appears a high likelihood given its provenance), then the Q1 of 2013 will be Britain’s first quarter of growth since Q3 of 2012. The UK economy registered a healthy growth level of almost 1% during this period – however the highly positive July/August/September 2012 reading was largely discounted by analysts who pointed out that both the London Olympic Games and the Queen’s Golden Jubilee fell during this three month window.

In spite of the mildly encouraging NIESR GDP forecast, Sterling struggled to assert itself against most of the major global currencies on the day yesterday. With the UK’s national debt standing at well over £1tn and rising, the UK economy will have to expand by considerably more than a quarterly 0.1% in order to regain any semblance of balance.

Elsewhere, one of the currencies which the Pound managed to gain ground against on the day yesterday was the US Dollar. The Greenback leaked support ahead of this evening’s publication of the minutes of its March 19-20th FOMC policy meeting. Analysts are predicting a dovish set of minutes following last Friday’s weak US jobs data.

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