By CountingPips.com
The U.K. Gross Domestic Product grew by 0.1 percent in the fourth quarter to lift the economy out of its 18-month long recession according to the report released by the Office of National Statistics today. The economic growth in the October to December quarter was less than expected and less than reassuring that the U.K.’s economy is out of the woods and on the way to recovery.
On an annual basis, the fourth quarter’s GDP decreased by 3.2 percent from the 
fourth quarter level of 2008 after an annual 5.1 percent decrease in the third quarter.
The consensus among market forecasters was that the economy would increase by 0.4 percent in the fourth quarter following a 0.2 percent decrease in the third quarter. The third quarter’s decline marked the sixth consecutive quarter of GDP contraction dating back to the second quarter of 2008.
The U.K.’s economic downturn of 2008-2009 registers as the worst since the 1940’s as GDP fell by a total of 6.0 percent during the recession and lasted longer than all of the other G7 countries.
Contributing to the fourth quarter’s higher GDP data was an increase in total production output by 0.1 percent following a decline of 0.9 percent in the third quarter. Manufacturing output advanced by 0.4 percent for the quarter while mining and quarrying rose by 1.0 percent. Electricity, gas and water supply declined by 3.3 percent in the quarter while construction output was flat after rising by 1.9 percent in the previous quarter.
Total services output increased in the quarter by 0.1 percent following the third quarter’s decline of 0.2 percent. Distribution, hotels and restaurants contributed the largest increase in the services industry with a by 0.4 percent gain while government and other services advanced by 0.2 percent for the quarter. Business services & finance as well as transport, storage & communication showed no growth in the quarter after decreases in the third quarter.
The Pound Sterling mixed in Forex Trade.
The pound sterling lost ground to the other major currencies immediately following the GDP announcement today but has managed to claw back and pare some losses in the U.S. trading session. The pound has declined versus the U.S. dollar and Japanese yen while the U.K. currency has gained slightly or trades unchanged versus the Canadian dollar, Australian dollar and the Swiss franc after declining sharply earlier today. Against the euro, the pound (EUR/GBP) has also turned around losses in the European session to trade close to unchanged from the beginning of the day at the 0.8707 exchange rate.
The pound has fallen against the U.S. dollar by 100 pips so far as the GBP/USD has declined from the opening exchange rate today of 1.6246 to trade at 1.6143 in the morning of the U.S. session at 10:43 am. The pound has fallen versus the yen as the GBP/JPY has dropped from the 146.88 opening rate to trading at 144.65 today.
GBP/USD Chart – The British Pound Sterling falling versus the U.S. Dollar this morning in forex trading after the UK GDP growth came in less than expected. The GBP/USD gained yesterday in trading after falling by approximately 160 pips last week but has fallen today back under the 1.6150 level and remains in its downtrend from last week.
