THE TAKEAWAY: Updated estimate confirms a 0.3% decline in UK GDP in Q4 -> BoE’s King says recovery in sight -> GBP relatively unchanged

The UK economy was confirmed to have fallen 0.3% in Q4 of 2012, and is now just one negative quarter away from entering a technical triple dip recession. Meanwhile, the fourth quarter saw 0.3% economic growth from Q4 2011, and was not stagnant, as was initially estimated by the UK Office for National Statistics.

Private consumption increased 0.2% in Q4, following a 0.3% rise in consumption in Q3. Exports fell 1.5% over the fourth quarter, while government spending increased 0.6%.

In February, Bank of England Governor King said a recovery is in sight, but growth will be weaker in the near term. Meanwhile, NIESR cut its 2013 growth forecast to 0.7% in February. Attention will now be turned to the current quarter. If the UK economy shows positive growth, it could be considered GBP positive.

However, today’s release did not deviate from an earlier estimate, and therefore had no significant effect on Sterling trading in Forex markets. GBP/USD is trading around 1.5135 at the time of this writing, and may see resistance by a broken support line around 1.5280. Support may be seen by a 2.5 year low set a few days ago at 1.5068.

(To learn about the UK’s participation in the so-called currency wars click here.)

GBPUSD Daily: February 27, 2013

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

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