The United Kingdom Gross Domestic Product fell a bit more than expected in the fourth quarter of 2008 according to a report by the Office of National Statistics today. The U.K. preliminary estimate showed that quarterly GDP fell 
by 1.6 percent in the October through December quarter of 2008 following a revised decline of 0.7 percent in the third quarter. The previous release on fourth quarter GDP had shown a 1.5 percent decline.
The fourth quarter GDP decline brought the U.K. economy into its first recession since 1991 and the 1.6 percent GDP decline marked the sharpest quarterly fall in GDP since the second quarter of 1980. The generally accepted definition of a recession is negative GDP growth for two consecutive quarters and the U.K. joins other major economies such as the U.S. and the Eurozone in recession.
On an annual basis, the fourth quarter GDP fell by 2.0 percent from the level of the fourth quarter of 2007 and marked the largest annual decline since the 1991 recession. Today’s data just surpassed economic forecasts which were expecting the quarterly GDP to decline by 1.5 percent and the annual GDP rate to fall by 1.9 percent.
Contributing to the contraction in GDP was a decline of total production output in the fourth quarter by 4.5 percent after falling by 1.8 percent in the third quarter. Construction activity fell by 4.9 percent while total services output saw a decline by 0.8 percent in the fourth quarter and surpassing the 0.5 percent decline in the third quarter. Household spending declined by 1.0 percent in the quarter.
Overall for the 2008 year, U.K. GDP increased by 0.7 percent after advancing by 3.0 percent in 2007 and marked the slowest growth pace in 17 years. The U.K. trade deficit narrowed to 7.6 billion pounds in the fourth quarter from 9.9 billion pounds in the third quarter. Exports decreased by 3.9 percent while imports also decreased by 5.9 percent for the quarter.
British Pound Sterling mixed in Forex Trading versus majors.
The British pound has been mixed today in forex trading against some of the other major currencies.
The pound is lower versus the US dollar today for the third straight day as the GBP/USD trades at the exchange rate of 1.4305 at 3:03pm EST after opening the day at 1.4481(00:00GMT) according to currency data by Oanda.
The euro has lost ground today versus the pound as the EUR/GBP trades at 0.9298 after opening the day at 0.9368. The pound has advanced versus the Swiss franc as the GBP/CHF has gained approximately 65 pips from its opening rate of 1.6276 to trading at 1.6341.
The pound, meanwhile, is trading lower against the Japanese yen today with the GBP/JPY falling from 142.43 to trading at 140.24. Against the Canadian dollar, the pound is falling for the third straight day as the GBP/CAD has fallen from the 1.7776 opening rate to trading at the exchange rate of 1.7680 CAD per GBP.
EUR/GBP Chart – The Euro falling today against the British Pound but the EUR/GBP pair is still trading above the 21-day moving average(green) on the daily chart. (55-day moving average in red, 100-day moving average in blue)
