Sterling tumbles following GDP announcement

Sterling fell rapidly yesterday (Tuesday January 26th) following a lower than expected growth in gross domestic product (GDP) in the UK.

At the time of the release of the figures, around 09:30GMT, sterling plummeted from $1.625 to the pound down to $1.61.

The afternoon has seen a slow increase in the currency but the currency is still nowhere near its high of $1.65 to the pound from earlier this month.

Analysts have said that the low rate of economic growth in the UK is to blame for the tumble.

GDP grew by 0.1 per cent in the fourth quarter of 2009, according to the Office for National Statistics.

However, this was less than the 0.4 per cent which was previously predicted.

David Tinsley UK economist at National Australia Bank told Reuters: "While it's good news that the UK is out of recession, it is clear the economy is not out of the woods yet."

He added: "It's not impossible to imagine the first quarter returning to negative growth on the basis of today's data."

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Posted by Eleanor Ward