Cable Drops as UK Enters Technical Recession
UK recorded its second consecutive quarter of contraction as GDP suprised to the downside printing at -0.2% versus 0.1% eyed with biggest losses coming from the volatile construction sector. In Q1 of 2012 services grew at a meager 0.1% Industrial Production expanded at 0.4% while construction fell at a whopping 3.0%.
The news put a dead stop to the rally in sterling as the pair slipped below the 1.6100 figure in immediate reaction to the report on speculation that BoE may have reconsider the idea of further QE in order to stimulate the economy. However, the first estimate of UK GDP is notoriously volatile and often subject to changes by the ONS leaving the possibility that the headline number may be revised higher in the near future.