"Goodness, the market is jittery. The moment the latest economic growth figures were announced yesterday morning, sterling fell 1.25 per cent against the euro and one per cent against the dollar within minutes.
Obviously, no-one was expecting that GDP would show a drop of half a per cent in the last three months of 2010.
“To be honest, although this is only a preliminary figure, this is a real shocker,” says Jeremy Cook, chief economist at World First. “Sterling has been seriously destabilised by these figures and traders are now abandoning all hope that the Bank of England will raise interest rates sooner rather than later. This opens the door to ‘stagflation’: a combination of high inflation and stagnant growth which would see the economic recovery snuffed out.”" Read more. "Forex focus: should Britain prepare for 'stagflation'?"
The Telegraph, January 27, 2011. Image by jscreationzs / FreeDigitalPhotos.net.