GBP sinks after UK economy shows biggest drop in 40 years
The UK economy shrank at a much larger rate for the first quarter of 2020 than previously thought. Gross Domestic Product (GDP) - a measure of the size and health of a country's economy - contracted 2.2% in what is the largest fall since 1979.
As the Bank of England issued a dire warning of the UK economy, stating the slump this year could be the worst in three centuries, figures also revealed a surge in household savings with spending collapsing by the largest amount since records began.
The Office for National Statistics also released monthly figures showing that the economy plummeted by 20.4% in April which is the largest single monthly drop since records began. Worryingly for many economists is that the contraction in GDP data for the first quarter of 2020, only represented nine days of the lockdown period.
Investors will be keen to hear Boris Johnson's keynote speech on the economy with a promise to spend big on infrastructure in what he calls a "new deal". Whether the £5 billion of spending will be received well by investors or not is still to be determined.
The British pound has been one of the weakest currencies in the past month, with EURGBP moving to a thirteen-week high and GBPUSD sinking to a five-week low.
Source: Admiral Markets MetaTrader 5, GBPUSD, Daily - Data range: from 26 November 2019 to 30 June 2020. Please note: Past performance is not a reliable indicator of future results.
EURGBP five-year performance: 2019 = -5.92%, 2018 = +1.14%, 2017 = +4.22%, 2016 = +15.60%, 2015 = -5.07%.
Trade with Cutting Edge Analytics
Did you know that you can download the Trading Central Technical Ideas indicator completely FREE by upgrading your MetaTrader 5 trading platform provided by Admiral Markets UK Ltd to the Supreme Edition?
This indicator provides you with actionable trading ideas and technical analysis on a wide range of asset classes. To get it free, just click on the banner below and download it today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks