Sterling halted its recent rally and is slipping back sharply against the kiwi as UK GDP figure disappoints

The pound was broadly sold on Friday following a weak GDP figure, losing three cents to the kiwi dollar, to close back down at 2.1607.

  • Data revealed that Britain’s economy has now shrunk for six quarters after it contracted by 0.4% in the most recent quarter, the longest period of contraction since records began in 1955.
  • Analysts have now renewed their discussion over the possibility of the Bank of England retaining, or even extending, its £175 billion QE programme, which would compound sterling’s weakness.
  • The news also confirmed that the BoE are likely to keep the benchmark interest rate at a record low of 0.5% firmly into 2010, lessening the appeal of sterling assets.
  • In response, the markets took the kiwi nearer its multi-year highs hit earlier this month, and this trend has continued in trading this morning as investors continue to take their lead from Friday’s data.