Sterling down after weak GDP and current account figures

Sterling weakened by 0.32 cents (0.27%) against the euro yesterday to close the day at 1.1729.

• In early trading yesterday sterling strengthened against the single currency, after Britain’s third-largest mortgage broker, Nationwide, reported a rise in house prices in June, the third rise in four months. Some traders took this as a sign that the ailing UK property market may be finally bottoming out.
  
• However, much worse-than-expected revised first-quarter UK GDP figures sent the pound into negative territory mid-morning. The data showed the UK’s economy contracted by 2.4% in the first three months of 2009, the largest decline in 50 years and a marked drop on the -1.9% originally published.
  
• The news that Lloyds Banking Group was to cut 2,100 jobs over the next three years also shook investor confidence in the market, as did a worse-than-expected UK current account figure released mid-morning, which registered at -£8.5 billion this month, well below analyst forecasts of -£6.5 billion.
  
• In trading so far today, the pound has resumed its slide against the single currency as investors continue to digest yesterday’s surprisingly weak GDP figure.
  
• There are no major announcements due in the eurozone today, whilst in the UK Manufacturing PMI data is due at 09.30 BST.