U.K. Persistent Recession Sets Pound Down

The U.K. fell “vertically” today after quarterly gross domestic product figures were published in London, signaling that the national central bank will have to extend its measures to help Great Britain on its way out of recession, decreasing attractiveness for the pound, which fell drastically.
The pound fell from a one-month high versus the U.S. dollar, and declined significantly versus the euro, after negative U.K. quarterly GDP figures surprised traders and analysts which were already expecting growth for the past quarter in Great Britain, setting the pound to plunge versus most of the 16 main traded currencies. Today’s report posted by the Office for National Statistics created a record of consecutive quarterly declines for the British economy, indicating that the United Kingdom has been one of the least resilient wealth nation, in comparison with its main Eurozone trading partners like Germany or France, which are recovering significantly from the global slump, causing the euro to systematically break records versus the pound.
Analysts stress on the fact that after today’s GDP report, an expected interest rate hike in the U.K. will probably have to wait longer, and that is something very negative for the pound outlook, since risk appetite is growing and traders are looking for higher-yielding options in countries with better profit opportunities.
GBP/USD traded at 1.6399 as of 13:00 GMT from 1.6693 just before the GDP report came to public. EUR/GBP rose to 0.9165 from 0.9005.

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