Declining UK GDP Hurts British Pound

The Great Britain pound slumped today after the report showed that Britain’s GDP unexpectedly shrank, causing doubts about the nation’s ability to deal with the budget deficit.

The UK gross domestic product decreased by 0.5 percent in the fourth quarter of 2010, compared with the increase of 0.7 percent in the previous quarter. The forecasts promised an increase by the same 0.5 rate. The report explained the decrease mainly by bad weather.

GBP/USD tumbled from 1.5986 to 1.5785 as of 14:55 GMT, while GBP/JPY dropped from 131.92 to 130.17.

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