Sterling, which had been broadly stable versus the Dollar and Euro in the past three sessions, collapsed again this morning following the release of very weak GDP data for Q2. The UK economy contracted 0.2% qoq, a sharp reversal from 0.5% qoq growth in Q1 and even weaker than the Bank of England’s forecast of no growth. The odds of the UK economy going into recession – two consecutive quarters of negative growth – have increased sharply, particularly as UK macro data for July have so far been soft. The GBP/EUR cross is currently trading at around 1.076, down 8.5% from four months ago.
