The British currency fell on Wednesday after a report showed that the UK economy contracted more than initially estimated during the fourth quarter.
The revised data released by the Office for National Statistics showed today that the nation's gross domestic product fell 0.3 percent quarter-on-quarter in the fourth quarter compared to the previously estimated 0.2 percent decline.
For the year 2011, GDP in volume terms increased 0.7 percent. Household final consumption expenditure increased 0.4 percent in volume terms during the period.
Although the third quarter GDP growth was revised up to 0.6 percent from 0.5 percent estimated previously, the downbeat data supported the view that the central bank should maintain its quantitative easing.
In its March monetary policy meeting, the Bank of England retained its quantitative easing unchanged at GBP 325 billion and retained a record low 0.5 percent interest rate.
Meanwhile, the UK's current account gap narrowed in the fourth quarter, mainly due to a fall in trade deficit and an increase in income surplus, the Office for National Statistics said today.
The current account deficit dropped to GBP 8.5 billion in the fourth quarter from a revised GBP 10.5 billion deficit in the third quarter. A year ago, the current account balance was in a deficit of GBP 14.1 billion.
Equities were down on a risk-aversion mood after the US Federal Reserve Chairman Ben Bernanke told ABC News in an interview that it's far too early to declare victory in the the U.S. economic recovery, as joblessness was still at a troubling high and housing markets still weak.
Thus far, the U.K. FTSE 100 index shed 0.17 percent, Germany's DAX dropped to 0.23 percent, while France's CAC-40 index see-sawed between a flat to lower levels.
The pound reached a fresh 2-week low of 1.4369 against the Swiss franc after the report. The next support zone for the pound-franc pair is seen around the 1.4320/40 area.
The sterling also slipped to more than a 2-week low of 0.8397 against the euro, a few pips short of its psychological support of 0.84. On the downside, the pound may find target around the 0.8415 level.
Moody's Investors Service has affirmed Germany's AAA government bond rating and said its rating outlook remained 'stable' due to "very low event risk" despite the prolonged debt crisis.
The agency was of the view that the country's economic, financial and political characteristics indicated "very low event risk" despite ongoing economic and financial uncertainties in the euro area.
The pound also lost ground against the currencies of the U.S. and Japan, slipping to a 2-day low of 1.5907 and 131.55, respectively around 4:35 am ET. If the sterling weakens further, likely support levels are seen at 130.90 against the yen and 1.5870 versus the greenback.
Looking ahead, the U.S. Commerce Department is set to release its durable goods orders report at 8:30 am ET. Economists expect a 2.9 percent increase in durable goods orders for February. Excluding transportation, orders may have risen 1.5 percent.
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Forex News
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.