The Organisation for Economic Co-operation and Development (OECD) predicts that the UK economy will contract in the first three months of 2012, thus taking the country back into recession.
Bank of England governor Sir Mervyn King has forecast that the economy will continue to zig-zag between positive and negative growth this year with a similar prediction that it will contract in the second quarter of 2012.
But there have been weaker signs coming from other parts of the economy. The index of production, which includes the manufacturing sector, unexpectedly fell 0.4% in January from December.
Conflicting figures from the Office for National Statistics (ONS) on Thursday showed that the UK service sector grew 0.2% in January compared with December.
The US Commerce Department has confirmed that the economy grew at an annual rate of 3% in the last three months of 2011. The third estimate of GDP was a revision from 2.8% due to increase of consumer spending.
In other news, official data indicated that the number of unemployed in Germany dropped more than expected in March, while the country’s jobless rate fell to a record low of 6.7%, indicating that the region’s largest economy is surviving the Eurozone debt crisis.
Today, sentiment towards the euro remains negative due to concerns over high Spanish borrowing costs, which is prior to the government’s budget statement later this morning
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