British Pound (GBP) Exchange Rate: Sterling Holding Steady After UK Growth Data
Sterling largely retained yesterday’s gains against the US Dollar and Euro overnight, beginning the European session in a slightly stronger position against two of its major rivals.
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The British asset advanced yesterday as the comments of one Bank of England official (regarding potential interest rate increases occurring early next year) lent the currency support.
Although the BoE’s Chief Economist Spencer Dale has since asserted that policymakers have little intention of raising interest rates in the near future, UK growth data prevented the Pound declining.
The GDP report confirmed that the UK economy expanded by 0.7 per cent in the final quarter of last year. The pace of expansion was down slightly from the 0.8 per cent recorded in the previous quarter but was in line with economists’ forecasts.
The report had little impact on the Pound, although year-on-year growth came in at 2.7 per cent in the fourth quarter rather than the 2.8 per cent predicted.
The data also detailed a 0.9 per cent drop in UK exports which was less than the 1.0 per cent fall expected and a 0.4 per cent gain in exports, double the 0.2 per cent increase forecast.
In the view of one London-based currency strategist; ‘We would need a massive economic disappointment or strong dovish signal from the Bank of England to really bring down Sterling, so any dips will be bought into. The fundamentals remain supportive.’
Pound movement was also limited as another BoE official, Ben Broadbent, stated that the UK’s economic outlook is highly dependent on international developments, and that the Eurozone’s tentative recovery has had a greater impact on UK growth than commonly accepted.
Tomorrow’s UK Lloyd’s business barometer is unlikely to have a considerable affect on the Pound, but investors will be looking ahead to Friday’s GfK consumer confidence survey.
The sentiment index is expected to have held at -7 in February.