Sterling falls and Mexican Peso and Loonie continue to gain

Sterling falls and Mexican Peso and Loonie continue to gain

07-24-2009 13:12

UK’s gross domestic product (GDP) proved today that its quarterly slump was twice as high as estimations by economists, on which the Sterling fell against many of the 16 main currencies. Emerging currencies benefited from increased confidence among traders. For that reason, the Mexican Peso finished a second week of gains versus the US Dollar, which is Mexico’s most important trading partner. Canada's Loonie also went up against the Greenback, as a result of comments by the Australian officials that the nation could already be leaving the slump behind.

Twice as high

The Office for National Statistics (ONS) reported today that UK’s economy declined 0.8%, which is twice as high as many economist forecasted. This led to fears that the nation’s slump will be more intensive and last longer than estimations suggested, which made the Pound less interesting for investors. The United Kingdom is facing its weakest one-year phase since World War II, with a credit crisis affecting its economy, a political crunch in the congress, followed by an intense reduction in the value of the Sterling against key currencies such as the Greenback and the Single Currency. The condition of UK’s economy remains severe, proved by today’s numbers.

Below par

Although economist predicted negative numbers for UK’s second quarter GDP, the definite figures were rather below par, on which directly occasioned fears regarding the state of Britain’s economy, affecting stock markets in the UK and restraining demand for the Sterling.

Leaving the slump behind

Mostly European reports showed today that business confidence in Germany progressed, inciting rumors that the Eurozone could soon leave the slump behind. This boosted emerging currencies, such as the Rand and the Peso, the latter posted another week of gains against the US Dollar.

Return of economic growth

The Australian Dollar, commonly called Loonie, derived from the picture of a loon on one side of the coin, gained for the sixth day against the US Dollar on the back of Canadian administration officials stating that the nation could soon begin to show economic growth, prolonging its longest period of gaining against the Greenback since May 2008. The Loony was also boosted by oil, one of Canada’s most import export products, and by equities, as their movements strongly impact its currency trends.