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Pound Falls as GDP Shrinks

April 25, 2012 at 9:21 by Vladimir Vyun

Stacks of coins and a fan of pound notesThe Great Britain pound fell today after a government report showed that the UK economy unexpectedly declined in the first quarter of this year, reducing appeal of the nation’s currency.

Britain’s gross domestic product dropped 0.2 percent in the first quarter of 2012, following the drop by 0.3 percent in the previous quarter. Traders were frustrated as analysts predicted a 0.1 percent increase. Gross value added grew 0.2 percent in February on an annual basis, while an advance by 0.6 percent was predicted. The worse-than-expected data added incentive for the Bank of England to ease its monetary policy and reduced demand for the pound. Improving sentiment about the situation in Europe was also negative for the UK currency.

GBP/USD was down from 1.6142 to 1.6085 and GBP/JPY dropped from 131.23 to 130.57 as of 9:21 GMT today.

If you have any questions, comments or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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