subject: The Time Is Now 24th May, Uk Forex Update [print this page] Vantage FX (http://www.vantagefx.co.uk/) provides a daily overview of the news activity and announcements currently shaping currency movements across the world. Jay Mawji, the companys head of market analysis, takes a look at news surrounding Eurozone economies on 24th May 2012.
GDP figures last month lead us into a technical recession which many couldnt believe. Some went further to say that there was no need to fear, fully expecting the GDP figure to be revised upwards. Well GDP figures today showed there was little sunshine over the UK economy.
The recession in the UK deepened as GDP figures this morning showed that the UK economy shrunk by 0.3% between January and March. The figures came in alongside CPI data which showed that the rate of inflation in the UK has fallen to 3%, which has continued its trend down toward the 2% level. Construction brought about the biggest decline in the UK GDP alongside contagion from the European Union. The European Union has been a constant thorn in the side of the UK economy and their constant decline has dragged the UK economy with them.
The calls for the UK to act on sliding GDP have been made loud and clear. The IMF earlier urged the UK economy to cut interest rates further from the record low of 0.5% in order to keep borrowing costs down and to attempt to promote spending and growth. On the other hand, key MPC members have begun to suggest their view towards holding back on Quantitative Easing is beginning to change. Although the threat to the UK economy from inflation continues, recent inflation data combined with poor GDP data suggests that the time for Quantitative Easing may be now, with the UK requiring a boost to nudge it back into the right direction. More will be made of a change in policy in the weeks to come, but for now the market has begun pricing in Quantitative Easing with sterling losing value across the board.
The time may be now, but the moment may not come
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