GBPUSD & EURGBP - Supported by Strong UK Economic Growth
STERLING (GBP) TALKING POINTS:
- UK economy grew at a better-than-expected rate in July.
- Manufacturing and industrial production disappoints.
UK ECONOMY GROWING FASTER-THAN-EXPECTED
Monthly GDP grew by 0.3% compared to 0.1% in June, while 3M/3M GDP expanded by a robust 0.6% compared to prior reading of 0.4%. On a year-on-year basis, the UK economy grew by 1.6% compared to expectations of 1.4% and a prior month’s reading of 1.3%.
The latest data also showed that UK manufacturing missed forecast and came in at -0.2% on a monthly basis (expected 0.2%)while industrial product grew by just 0.1%, missing expectations of 0.2% and a prior month’s reading of 0.4%.
Commenting on today’s GDP figures, Rob Kent-Smith, head of GDP noted ‘Growth in the economy picked up in the three months to July. Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year.’
A mixed-to-positive bag of UK data that should help to reinforce Sterling at current levels ahead of further moves higher. GBPUSD remains in thrall to the strength of the US dollar, and EURGBP may be a better way of capturing Sterling strength against one of the majors.
EURGBP FOUR HOUR PRICE CHART (JULY 16 – SEPTEMBER 10, 2018)
GBPUSD FOUR HOUR PRICE CHART (JULY 16 – SEPTEMBER 10, 2018)
BANK OF ENGLAND ON THURSDAY
Ahead, Tuesday sees the release of the latest UK jobs and wages data - weekly earnings expected to pick-up while the unemployment rate remains at 4% - before the latest monetary policy release from the Bank of England on Thursday. All policy levers are expected to be left unchanged, although Bank of England governor Mark Carney will give his latest thoughts on the state of the economy.
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