Guide to Trading Forex as UK Economy Expected to Grow

LONDON, July 16, 2012 /PRNewswire/ --

Following a dismal first half of the year, leading forecaster Ernst & Young has predicted an 'Indian summer' for the UK economy.

In the following guide, we look at the ITEM club forecast and how you can trade on the future value of the UK GBP with a forex trading account from City Index.

UK Economy to Receive Boost

Today, Monday 16 July, the Ernst and Young ITEM club forecast that the UK economy would 'return to growth over the next six months', following a dismal first half of the year.

This boost to the suffering economy is set to come from falling inflation and a pick-up in consumer spending.

The latest quarterly forecast, out today, states that inflationary pressures that have been battering household incomes are now easing much quicker than expected.

By the end of the year, the ITEM club predict that inflation should hit 1.7%, providing that commodity prices remain subdued.

The result should be more consumers with a greater deal of money to spend on the high street.

However, the forecast also shows the 'fillip to consumer spending in the second half of the year will only enable UK GDP to mark time', with 'zero growth' being seen for 2012 as a whole.

Trade UK GBP following ITEM Club Forecast

Through a forex trading account from City Index, you can take a position across 37 major and minor currency pairs from their professional Advantage Trader platform.

Following the ITEM club forecast, you can take a position on the future price movement of the GBP/USD currency pair for only a small initial deposit.

Considering the boost the UK economy is set to receive through falling inflation and increased consumer spending, you may foresee the value of the British pound rising against the US dollar.

If so, you can go long and buy the GBP/USD currency pair. In the event you are correct your profits will rise in line with any increase in the value of the British pound. However, if you are wrong and the GBP depreciates against the USD - you can incur losses greater than your initial deposit.

Alternatively, you may wish to go short and sell the GBP following news that the UK economy is set to see 'zero growth' in 2012 as a whole.

Therefore, through the forex trading platform you can go short and sell the GBP/USD currency pair. In the event you are correct and the British pound depreciates against the US dollar - you will profit. However, in the event it appreciates and moves against your position - you could incur a loss greater than your initial deposit.

Start Trading Forex

To start trading forex across a range of trading platforms - including mobile and tablets - you can apply for a forex trading account through the City Index website.

Read More Forex Trading Tips

If you found this article helpful, you may want to read more just like this. You can access a range of forex trading tips, guides and articles through the Forex Trading section of the City Index website.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk for details.

Spread betting, CFD trading and forex trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.