Sterling weakened in early trading this morning, continuing its decline from last week as caution continued to grip investors. UK GDP growth for the first quarter remained unchanged at 0.3%, which was in line with the median forecast according to Bloomberg. However, the current account deficit for the first quarter widened to £9.628 billion, much higher than the expected figure of £4.7 billion, which sent sterling to its intra-day low of $1.4950. Some relief may be found in the news that profit warnings from UK companies are at a 7-year low of 45 for the second quarter, suggesting that the nation’s economy is healthier than previously thought. However, Ernst & Young warned that this is set to increase as government spending cuts begin to take effect. UBS issued a report which recommended that investors sell the pound against the dollar. The bank highlighted the fact that the Bank of England's Monetary Policy Committee is not expected to vote for rate increases. It also said that the beneficial impact of last month’s budget was now priced into sterling and added that the scale of cuts forecast in the budget would undermine UK growth in the near future. UBS expects sterling to fall to $1.4000. David Choe, London