Pound/dollar fell to new weekly lows on a handful of bad news. The pair now trades around 1.5530 after falling to 1.5527 earlier.
It traded above 1.5620 before the bad news was released, so this is a fall of nearly 100 pips. 3 things are behind the fall of the pound.
- GDP: The contraction of the economy by 0.3% was confirmed in the final GDP release. This is the second consecutive month of negative growth, and therefore a technical recession. The initial release stood on -0.2% and was revised later to -0.3%. This was confirmed now. However, there was a small downwards revision of the year-over-year drop, from -0.1% to -0.2%. Construction was the main culprit.
- Current Account: A deficit of around 9 billion pounds was expected in Britain’s current account (including the goods in the trade balance, services, cash and more) during the first quarter. The actual result was a much wider deficit of 11.2 billion pounds. Quite a disappointment.
- EU Summit: Perhaps the most important factor comes from the market mood. Germany played down expectations for any kind of quick solution at the EU Summit that begins today. This disappointment was previewed here and triggered big moves in EUR/USD as well. While the pound gained against the euro, it could fight the dollar.
For more on the pound, see the Pound/dollar.
