Second quarter gross domestic product for Britain shrank 0.8%. Before this data came out early Friday morning, analysts had forecast a loss of only 0.3%.
These numbers, representing mere fractions of a percent, may not appear to be significant, but they are. These fractions of percents represent enormous value.
The Associated Press reported, “[Britain’s] economy has now shrunk by 5.6 percent since the second quarter of last year, the biggest drop since quarterly records began in 1955.”
Yet, this second quarter GDP report is somewhat positive, because, despite the decline being worse than expected, it was still less of a decline than the previous quarter. This 0.8% is one-third of the 2.4% loss in the first quarter.
Overall, Britain’s economy is improving, just not as quickly as anticipated. Reuters stated that the GDP numbers “served a reminder of how fragile things are.”
“Britain was the first major country in the region to publish GDP data for the period and, even if the fall paled next to the first-quarter drop of 2.4 percent, it prompted some economists to question how fast things will normalise there,” reported Reuters.
Specifically, many economists are concerned that the drop may indicate that the third quarter will not see any growth either.
The pound sterling has definitely been affected by the shrinking GDP. RTT News reported, “The UK's sterling that plummeted against its major rivals following the second quarter GDP report declined further ahead of commencing the New York session on Friday.”
Editor Harinder Singh of Taipan’s newest service, Currency Profits Trader, had anticipated a lower GDP number. Before the GDP report came out, Harinder wrote, “Expectations are for a quarterly decline of 0.3%, while the previous quarter’s decline was 2.4%. I have a feeling the actual decline could be worse than 0.3%.”
He applied this understanding to currencies and explained how he was positioning the Currency Profits portfolio to benefit from this news. To learn more about his trading service, follow this link.
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