- Pound Weaker to End Week Despite Positive GDP
- Euro Weakness Continues on Spanish Data
- US Jobless Figures Higher than Expected
Despite better than expected GDP figures for Q4 coming from the UK, the Sterling forex market has dipped weaker on the news below $1.38. This figure for the final quarter of 2020 came in at almost double what analysts had predicted. Downward revisions on CPI data from Spain have also left the Euro trading slightly weaker to end the week while in the US markets are looking toward a quiet opening following weekly jobless numbers that were a slight miss on predictions.
Worst UK Year Since 1709
Numbers released today in the UK for Q4 drew a line under 2020 for the country and have posted the worst contraction in the economy in more than 300 years since “The Great Frost” of 1709. The contraction of 9.9% on the year easily surpassed analyst expectations of an 8% decline and also overtook other crisis years of 1921, and 2009 in the aftermath of the financial crisis.
Not all bad news for Britain though as figures for Q4 favorably beat predictions. A 1% growth for the final quarter follows a huge rebound in Q3 and puts the country ahead of targets that had been expecting a 0.5% boost. The second half of the year then, has been very positive in terms of GDP and also the fact that the vaccine rollout continues apace. The drop back is attributed by many in forex trading as a buy the rumor, sell the news scenario.
Euro Slump Continues With Data Disappointment
The Euro has been on a disappointing run of late. It failed to take advance of previous weakness in the Dollar when other major currencies like the GBP were showing strength. This has been due to a combination of economic and COVID-19 news related factors.
With many nations struggling economically and injecting mass stimulus to prop things up, a lot has come down to the handling of the pandemic and the perceived speed with which life can be returned to normal. For Europe, this has been particularly slow, and the downward revision of Spanish CPI numbers to a 0.5% January increase speaks to that. The fact that the largest economy in the region, Germany, has voted to extend its lockdown until March 7th is also not a positive sign for the currency.
Weekly Jobless Numbers Surpass Expectations
As Wall Street looks to end the week on a positive note, the US weekly unemployment numbers have come in with a higher than expected number. The figure totaled 793,000 and while it was a drop from the previous week, it still came in higher than the 760,000 analysts had predicted.
Continuing claims have also declined on the week but there has been a spike in the total number of those receiving benefits related to all pandemic compensation programs. The total number of claimants rose to 20.44 million with many still struggling to get back to work.