By CountingPips.com
The United Kingdom Gross Domestic Product declined unexpectedly in the fourth quarter of 2010 and the British pound sterling has fallen sharply in forex trading on the news. The first report for the U.K. fourth quarter GDP data showed that economic activity fell by 0.5 percent in the October through December quarter following an advance by 0.7 percent in the third quarter of 2010, according to the latest report by the Office of National Statistics.
The GDP decline was worse than expected as forecasts were looking for a 0.5 percent rise in the GDP numbers for the quarter.
On an annual basis, the fourth quarter GDP rose by 1.7 percent from the level of the fourth quarter of 2010 following a third-quarter increase in GDP by 2.7 percent. The annual data was also worse than economic forecasts which were expecting the annual GDP rate to increase by approximately 2.6 percent.
Contributing to the decline in GDP for the fourth quarter was a decrease in total services output by 0.5 percent while construction output fell by 3.3 percent in the quarter.
British pound tumbles in forex trade
The British pound has felt the effects of the news and has fallen versus most of the major currencies in forex trading today. The pound has been declining sharply against the euro, US dollar, Japanese yen, Swiss franc, Canadian dollar and the Australian dollar.
GBP/USD Chart – The British Pound Sterling edging back a little higher in forex trading versus the US Dollar today after a sharp drop on the worse than expected GDP report. The GBP/USD is down by over 150 pips since the day’s opening.
