UK GDP Figures & Sterling Exchange Rates

US President Barack Obama has addressed a joint session of Congress for the first time, warning that the nation faces a "day of reckoning". Stressing the severity of the economic crisis, Mr Obama told law makers that the US would emerge stronger when it ended. "We will rebuild, we will recover," Mr Obama said, adding: "Now is the time to act boldly and wisely."

Republicans said Mr Obama's plans were "wasteful", saying they spent "money we do not have on things we do not need". The president has seen Congress pass a $787bn eonomic stimulus plan and is preparing to announce a budget.

Keep a careful eye on this news, as any dramatic measures could have big consequences on the value of the US Dollar. If measures are taken that are seen as positive for the US economy, we could see the dollar gain strength, and exchange rates plummet.

We are already well away from the days of $2 to the pound, with current levels around the 1.4560 mark. If you are waiting for a recovery, then do bear in mind this may not happen!

This illustration shows how many billions governments around the world are spending in an attempt to kick start economies. It would seem markets are not really reacting to Obamas words as yet, with GBPUSD rates remaining failry steady.

This is probably due to US Federal Reserve chief Ben Bernanke warning Congress that without the right policies from the government, the US recession could last into 2010. But he said if the Obama administration and the central bank can restore some measure of financial stability, 2010 could be a year of recovery.

With so much uncertainty across the world at the moment, it is impossible to predict which economies and therfore currencies will suffer, and which will strengthen. Get in touch today to discuss the implications of this on your currency requirements.

In some good news yesterday, figures showed that the number of mortgage approvals in the UK made by banks rose slightly in January.

Mortgage approval levels hit 23,376 last month, up 4% from 22,416 in December, the British Bankers' Association (BBA) said. However, the number of approvals in January was still 43% lower than the same month a year earlier, so this slight increase masks the dire situation facing the UK Housing market presently.

The total net value of mortgage lending last month was £2.9bn, down from £3.3bn in December.
This figure strips out redemptions and repayments, and so gives a clear picture of new mortgage lending by the High Street banks.

The decline in this core area of the UK economy has helped weaken the pound over the last 6 months. Most Estate Agents are not predicting any significant recovery until will into 2010.

We have already this morning seen the German GDP figures, which were exactly as expected, so causing no change in exchange rates.

We have the UK GDP data released at 09:30 am this morningwhich are expected to show a quarter on quarter decline of 1.6% and an year on year decline of 1.9%, confirming that the UK econony is in severe retraction. If the figures released are any worse than this, expect lower exchange rates for Sterling GBP to Euro EUR.

We also have some Home Sales data from the US this afternoon.

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