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Upside surprise from UK GDP data sends pound rocketing

currency-newsUpside surprise from UK GDP data sends pound rocketing
Markets responded positively to the latest UK GDP data yesterday, sending the pound racing higher across the board.

The pound has started this morning on poor form. GBP/EUR is down -0.2% to €1.1207, as is GBP/USD at US$1.3252. GBP/AUD is down at A$1.7200, GBP/NZD at NZ$1.9245 and GBP/CAD at C$1.6957.

The UK, Eurozone and US all have big developments on the economic calendar today. Read on to see which will be the most impactful for your currency transfers…

What’s been happening?

The pound soared yesterday after the finalised GDP figures for the third quarter showed above-forecast growth.

Earlier estimates had put growth in the third quarter at 0.3%, but the actual figure was revised higher to 0.4%.

Although hardly a triumph in of itself – the data also showed that the construction sector is in recession – it did boost the odds that the Bank of England (BoE) will vote to raise interest rates at the 2nd November monetary policy meeting.

This pushed the pound up significantly.

Strong German business confidence figures helped to slow the GBP/EUR exchange rate advance, however.

The latest surveys, conducted by Ifo, found that private sector sentiment in the Eurozone’s biggest economy actually improved notably this month, against expectations that it would weaken ever-so-slightly.

The US dollar, meanwhile, was on strong form thanks to a surprising uptick in durable goods orders during September.

Orders grew 2.2% last month compared to 2% in August, beating forecasts of a slowdown to 1%.

New home sales soared by nearly 19% on the month, further helping to keep the outlook for the US economy positive and bets of an interest rate hike high.

GBP/USD was able to hold its gains, however.

What’s coming up?
Today, the UK Confederation of British Industry (CBI) retail data could weaken the pound if it adds to the picture of weakening consumer activity. A drop in the reported sales index from 42 to 14 is likely to do just that.

The European Central Bank (ECB) monetary policy meeting is likely to cause significant volatility for GBP/EUR, as markets are expecting the Governing Council to start tapering the quantitative easing programme.

The US also has big data on the calendar today, in the form of the advance goods trade balance.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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