Pound vs US dollar : GBP rises as UK economic growth beats expectations.

This has come to my notice that the GBP rises above expectation in the UK expectation. This means that the pound US dollar exchange rate edged higher as the UK’s latest GDP figures came in stronger than forecast. The pound is currently trading at around $1.339 against the US dollar, up ever so slightly from this morning’s starting levels.

According to data released by the Office for National Statistics, the UK economy grew 1.7 percent year-on-year in the third quarter, beating the previous estimate of 1.5 percent. The jump was largely attributed to growth in Britain’s all-important services sector, which performed remarkably well over the summer, although most sectors of the economy also appeared to show steady growth as well and most of the growth came from the dominant service sector, with accounting, recruitment agencies and retailing all performing well.

Manufacturing also boosted growth thanks to an increase in exports and the introduction of new car models. Meanwhile, household spending and business investment both grew steadily. Also helping strengthen Sterling this morning were the accompanying business investment figures as they revealed that investment held at 0.5 per cent in the third quarter, beating expectations that it would slip to 0.2%. The robust investment statistics will help allay fears that the uncertainty of Brexit is denting firms confidence in the UK.

The US dollar tumbled on Thursday as the final reading for domestic growth in the third quarter was revised down from a previous estimate. The US Commerce Department reported yesterday that US GDP came in at 3.2 percent in the three months to September, down from expectations that growth would strike a new three-year high of 3.3 percent.

The disappointing result was largely on the back of a dip in personal consumption as the single largest contributor to US growth was revised down from 2.3 percent to 2.2 percent. Looking ahead to next week, a lull in data and thin trading volumes over the Christmas period may leave the GBP/USD exchange rate a little muted.

There will a few titbits of data for investors to mull over, however, with the UK set to release some housing data in the form of the British Banking Association’s (BBA) mortgage approvals figures and Nationwide’s house price index, although these are likely to only have a small impact on Sterling.

Meanwhile, the focus for USD investors for the week is likely to be on latest US consumer confidence figures, with an expected dip in sentiment this month possibly weakening the US level of rate.

 

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