There are two schools of thought that traders will use to try and make profits on the financial markets. The first being technical analysis which simply means looking at the historical price movements of an instrument in order to try and predict what might happen to it in the future.
The other is fundamental analysis which involves the study of all the external factors that might affect prices in a given market. These external factors include economic developments such as unemployment and inflation figures, changes in government policy, political events, and, the weather.
The extent of the decline in the UK’s latest GDP figures from the Office for National Statistics have disappointed and surprised many in the global financial community. After four consecutive quarters of growth the UK economy contracted by 0.5% in the final quarter of 2010.
One of the major contributing factors to this decrease in economic growth was the unusually harsh weather conditions experienced in the UK during the month of December. Along with the expected influence on retail sales as consumers struggled to get to the high street the weather also affected other sectors too.
The construction industry was hit as the snow made both building sites and the supply of materials challenging. Service sector growth was impacted with restaurant and hotel trade down as customers saved their money and stayed at home.
When the GDP announcement was made the pound dropped against all its major partner currencies, including a 1.3% fall against the US dollar. And the FTSE 100 lost 26.14 points (-0.44%).
