“The pound rose sharply versus the euro and US dollar after today’s first-quarter 2013 UK GDP data suggested the economy avoided an unprecedented triple-dip recession by a wider than expected margin. Sterling remains some 2% lower versus the dollar compared to three months ago.” Chris Saint, Head of Currency Dealing, Hargreaves Lansdown
Despite the mildly positive GDP outcome for Chancellor Osborne, this does little to alter the bleak overall picture. The economy remains 2.6% smaller than at its 2008 peak, which compares unfavourably with many of the UK’s peers. It also does little to enable the government to refute critics’ claims that its austerity programme is doing more to stifle growth than it is to curb rising public debt. Absent an improbable U-turn from the government’s plan A, hopes of the recovery gathering momentum will inevitably be pinned to monetary measures such as quantitative easing and the newly extended Funding for Lending Scheme. From a currency viewpoint, this should keep the pound on the back foot in the near term given a widespread scepticism that these measures will be sufficient for the economy to gain suitable traction going forward.”
At the time of writing, the exchange rates stand at:
Sterling / US dollar 1.5402 0.79%
Sterling / Euro 1.1805 0.62%