Is the UK heading back into recession?

Thursday was a fairly stable day for the GBP/USD cross following the previous days loses, over the course of the morning rates fell by 0.5% to a low of $1.5863 before recovering back into the $1.59’s towards the end of the afternoon.

Data released on Thursday morning showed that British house prices had dropped in March, their sharpest fall for over two years. There was also news that UK mortgage approvals had unexpectedly fallen for the month on February. This pushed rates further away from the highs we saw on Tuesday and is another reminder the UK economy is still far from recovering.

This was highlighted by the Organisation for Economic Co-operation and Development (OECD) that the UK economy will contract in the first quarter of 2012, which will mean the country is back into recession.

However, many other analysts are still predicting growth in the first three months of 2012. Figures from the Office of National Statistics (ONS) on Thursday have shown the UK service sector has grown by 0.2% in January compared with December.

Based on the latest information Traders said sterling would struggle to sustain a move over $1.60. With rates still close to the highest we have seen since November it is still a very good time to buy dollars, with a Forward contract you can take advantage of the current highs and book your rate of exchange for up to two years in advance. If you would like to discuss Forward Contracts or any of the other options available to you click here to send me a direct email or use the contact form on the homepage of the blog.