Pound LIVE: GBP Sterling PLUMMETS against euro and US dollar after economic growth SLUMP

Pound LIVE: GBP Sterling PLUMMETS against euro and US dollar after economic growth SLUMP

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Figures from the Office for National Statistics showed Growth Domestic Product (GDP) grew by 0.2 percent during the final three months of 2018 compared to 0.6 percent in the previous quarter – the lowest level of growth since the start of last year. It will raise eyebrows in the City after economists had forecasted growth of 0.3 percent. Annually, GDP increased 1.4 percent – the weakest it has been since 2012.

Pound Sterling plummeted 0.24 percent against the euro to 1.1405 after opening at 1.1426.

The British currency has suffered a bigger deficit against the US dollar, sliding 0.33 percent to 1.2920 after opening at 1.2946.

The ONS figures revealed car production was down 4.9 in the final three months of last year, marking the biggest decline since the first quarter of 2009.

Total production output fell 1.1 percent, the largest decline since the end of 2012. This included a 0.9 percent dip in manufacturing.

pound uk economy

Pound LIVE: Sterling has struggled ahead of the release of vital UK economic data (Image: GETTY)

Construction dropped 0.4 percent in the fourth quarter, following two consecutive quarter of growth during the summer.

Rob Kent-Smith, head of GDP at the ONS, said: “GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining. However, services continued to grow with the health sector, management consultants and IT all doing well.

“Declines were seen across the economy in December, but single month data can be volatile meaning quarterly figures often give a better indication of the health of the economy.

“The UK’s trade deficit widened slightly in the last three months of the year, while business investment again declined, now for the fourth quarter in a row.”

pound euro exchange rate

Pound LIVE: The British currency has slumped against the euro this morning (Image: BLOOMBERG)

The thing that worries me most is that the monthly numbers for GDP were dreadful. “The monthly data can be volatile but that does not bode well heading into 2019 with peak Brexit uncertainty

Kallum Pickering

But Kallum Pickering, a UK economist at Berenberg Bank, described the monthly GDP numbers as “dreadful”, warning Brexit uncertaintities are continuing to have a huge impact on the outlook for the economy this year.

He said: “The thing that worries me most is that the monthly numbers for GDP were dreadful.

“The monthly data can be volatile but that does not bode well heading into 2019 with peak Brexit uncertainty.”

But International Trade Secretary Liam Fox said Britain’s economic slowdown should not be blamed entirely on Brexit.

He told a news conference in Geneva when unveiling details of the new trade deal signed between the UK and Switzerland: “Clearly there are those who believe that Brexit is the only economic factor applying to the UK economy.

“I think you’ll find that the predicted slowdown in a number of European economies is not disconnected from the slowdown, for example, in China.”

pound us dollar exchange rate

Pound LIVE: Sterling has fallen below 1.29 against the US dollar (Image: BLOOMBERG)

Concerns over the pound have mounted further this morning after a new report revealed UK manufacturing output plummeted to a 15-month low as the industry anticipates a cliff-edge Brexit.

The report states business confidence has sunk to its lowest level since December 2016, while output in the services sector remains below the long-term growth trend.

Business advisers BDO warned stockpiling by companies ahead of the UK’s departure from the European Union is likely to have masked an even greater decline.

A separate business survey also showed employment fell for the first time in four years amid Brexit concerns in Northern Ireland.

The Purchasing Managers Index (PMI) said conditions were “subdued” at the start of the year, with reduced staffing levels primarily due to job losses in the services sector.

The survey of firms revealed business activity rose at the weakest pace for more than two years, while new orders only increased marginally.

Brexit news Liam Fox

Pound LIVE: Liam Fox refused to entirely blame Brexit for the economic slowdown (Image: SKY NEWS)

The thing that worries me most is that the monthly numbers for GDP were dreadful. “The monthly data can be volatile but that does not bode well heading into 2019 with peak Brexit uncertainty

Kallum Pickering

Arne Anders Lohmann Rasmussen, chief analyst at Danske Bank, warned sentiment in the pound could erode unless there is a reduction in the no deal Brexit risks.

A report from Pound Sterling Live states he said in a recent currency strategy note to clients: “We maintain the view that it will require further reduction in the ‘no deal’ Brexit risk for EUR/GBP to test and eventually break below 0.86.

“Appetite for GBP is likely to deteriorate as 26 February approaches without any signs of an agreement between the EU and UK.”

Pound Sterling Live says Morgan Stanley strategist Hans Redeker is more optimistic, who said: “We emphasise our bearish EUR/GBP call even though the BOE has lowered its GDP projection towards the lowest level since 2009.”

This morning’s bleak figures come after the Bank of England sensationally warned the UK economy is not prepared for a no-deal Brexit after growth was downgraded to its lowest level since the financial crash.

pound live bank of england

Pound LIVE: Mark Carney warned Brexit doubts are causing a ‘series of tensions in the economy’ (Image: GETTY)

Bank of England Governor Mark Carney pointed towards uncertainties around Brexit causing “short-term volatility” and a “series of tensions” in the economy and businesses.

He said: “The fog of Brexit is causing short term volatility in the economic data, and more fundamentally, it is creating a series of tensions in the economy, tensions for business.

“Although many companies are stepping up their contingency planning, the economy as a whole is still not yet prepared for a no-deal, no transition exit.”

Mr Carney added: “Given the wide range of potential scenarios and the various paths to them, it would be remarkable if the current levels of sterling and other uk financial asset prices were consistent with the outcome that finally emerges.

“Uncertainty around negotiations has obviously intensified since November and is now weighing more heavily on activity, predominantly lower business investment and tighter financial conditions.”

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