Sterling weakens as UK sinks back into recession

Published: 26 April, 2012

Sterling weakened off against the majority of currencies yesterday morning after it was confirmed that the UK is now technically back in recession.

Currency rates - April 26

EURO/GBP - 1.2235

US$/GBP - 1.6189

CHF/GBP - 1.4706

CAN$/GBP - 1.5902

AUS$/GBP - 1.5597

ZAR/GBP - 12.5230

JPY/GBP - 131.43

HKD/GBP - 12.5621

NZD/GBP - 1.9804

SEK/GBP - 10.8680

AED/GBP - 5.9421

US$/EURO - 1.3229

INR/GBP - 84.95

The release of GDP figures point to the first double dip recession since the 1970's and has prompted a call for further quantitative easing from certain sectors of the market. However, the asset purchase program is still expected to be kept on hold next month.

The euro had a mixed day yesterday strengthening against sterling in the morning following the poor GDP figures released in the UK; but, came under pressure against the majority of currencies as the day progressed. Yesterday, the ECB president called for a "growth compact" as the measures currently employed are not having the desired effect. The German Chancellor backed this idea stating that "structural reforms" need to be implemented.

In the US, durable goods orders dropped sharply yesterday with the worst fall seen since 2009; but, the big news was the Federal Open Market Committee (FOMC) improving its forecasts for the US economy; furthermore, there was a distinct lack of mention for further quantitative easing which calmed the markets. Unemployment claims figures and the monthly change in the number of homes under contract to be sold are the main releases on the agenda today.

Elsewhere, the commodity backed currencies performed well yesterday with the Canadian and Australian dollars recovering fairly well from earlier in the week. Late last night, the Reserve Bank of New Zealand's official cash rate decision was announced and the governor of the Bank of Canada was also speaking.

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