Forex Flash: UK GBP projected to wane moving foward – BNP
FXstreet.com (Barcelona) - The UK ONS second estimate confirmed that Q3 GDP increased by 1% QoQ, after declining for three consecutive quarters (-0.4% in Q4 2011, -0.3% in Q1 2012 and -0.4% in Q2 2012). Nonetheless, according to Caroline Newhouse, an analyst at BNP, "these figures were boosted by the Olympic and the economy is likely to fall back into negative territory in Q4 before recovering slowly next year."
Overall, the picture remains broadly unchanged from the preliminary estimate. The reduction in working days as a result of the Diamond Jubilee in Q2 2012 and hosting of the Olympic and Paralympic Games in Q3 explain why growth appears so buoyant compared with recent quarters. The Bank of England predicts that the economy will fall back into negative territory in Q4 before recovering slowly next year.
"Furthermore, it is likely to experience a period of persistent low growth over the next two years as the euro- region debt crisis and the squeeze on earnings from rising fuel prices weigh on spending, exports and investment." she adds.
Overall, the picture remains broadly unchanged from the preliminary estimate. The reduction in working days as a result of the Diamond Jubilee in Q2 2012 and hosting of the Olympic and Paralympic Games in Q3 explain why growth appears so buoyant compared with recent quarters. The Bank of England predicts that the economy will fall back into negative territory in Q4 before recovering slowly next year.
"Furthermore, it is likely to experience a period of persistent low growth over the next two years as the euro- region debt crisis and the squeeze on earnings from rising fuel prices weigh on spending, exports and investment." she adds.
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