Not every email client supports animated GIFs. Newer versions of Outlook (2007, 2010 and 2013) won't show the animation. Instead, they will show the first frame of the animation. To overcome this, many email designers ensure that vital information-perhaps a call-to-action, offer, or headline—is included in the first frame of the GIF. Windows Phone 7 also lacks support for animated GIFs.

If you view the email on another email client e.g. Gmail, Hotmail you should be able to see the animated GIF working correctly.