The GBP/USD gained 50 points to trade at 1.4870 coming off its lows of the week after a mix of top level data today. The U.K. economy grew less than previously thought. Britain's economy posted 0.4 percent growth in the third quarter, down from an earlier estimate of 0.5 percent, the Office for National Statistics said on Wednesday.
The GBP/USD gained 50 points to trade at 1.4870 coming off its lows of the week after a mix of top level data today. The U.K. economy grew less than previously thought. Britain's economy posted 0.4 percent growth in the third quarter, down from an earlier estimate of 0.5 percent, the Office for National Statistics said on Wednesday.
Continued weakness of the pound brings the prospect of a move back to the lows at 1.4565 closer. A move below the support at 1.4850 could well be the catalyst for this move to unfold. The pound has declined four days in succession and needs to recover back through 1.5000 to stabilize.
A Treasury spokesman said: "We should be clear, as the IMF said earlier this month our recent economic performance has been strong. "The UK was the fastest growing economy in the G7 last year, we're leading the pack with the US this year, we have a record high employment rate and the deficit is down."
Ruth Miller, UK economist at Capital Economics in London, said the figures showed that "the economic recovery has less momentum than previously thought and still looks worryingly unbalanced".
The UK current account deficit was unexpectedly stable in the third quarter at the lowest level since the third quarter of 2013 as a reduced shortfall in investment income countered a renewed widening in the total trade deficit.
The GDP figures show the problem of the UK economy relying on domestic demand, says economist Nina Skero at the Centre for Economics and Business Research:
Today’s release only adds fuel to the existing concerns that economic growth is overly reliant on household consumption. Given continued subdued performance in key markets and the relative strength of sterling (which may get even stronger as interest rates begin to rise), boosting trade prospects will require constant government encouragement.
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DailyForex.com says that in the UK, the latest reading of the economy showed Q3 growth slipping to 0.4% (QOQ) against analysts’ forecasts of 0.5%. On a year-over-year basis, Q3 growth fell to 2.1% against the consensus call of 2.3%. The Bank of England is still weighing the possibility of a rate hike and, like the Federal Reserve Bank, that decision will be driven by data. The GBP/USD pair was trading at $1.4879, a gain of 0.36% while the EUR/GBP was trading at 0.7342 Pence, down 0.61%.
Remember: The British Pound is today the 3rd most important reserve currency globally as well as the fourth most traded currency in the foreign exchange market, subsequent to the United States dollar, the euro, and the Japanese yen. The pound and the euro usually fluctuate in value against one another. However, there is often a correlation between movements in their respective exchange rates with other currencies such as the US dollar.
