Pound Sterling (GBP) Exchange Rate Trending Statically against Euro (EUR) and US Dollar (USD) after UK GDP
The Pound Sterling (GBP) exchange rate was trending in a weaker position against the majority of its currency counterparts for much of the last five days as disappointing UK fundamentals and the reduced odds of a Bank of England interest rate increase weighed on the asset.
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While the currency received a modest boost on Friday in the form of reasonable UK second quarter growth data, gains were fairly minimal in light of ongoing wage-growth concerns.
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.2489.
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.6701.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate achieved a high of 1.7916.
The UK’s GDP data showed quarter-on-quarter growth of 0.8% in the second quarter of the year.
The British economy had also expanded by 0.8% in the first quarter of the year.
While the quarter-on-quarter figure received no upward revision, the year-on-year result was slightly stronger than initially estimated – coming in at 3.2% instead of 3.1%.
The data contrasted starkly with the less-than-impressive GDP reports for the Eurozone and its largest economies, published yesterday.
Those figures showed second quarter contraction in Germany and stagnation in France and the Eurozone as a whole.
Industry Expert Insight, Exchange Rate Forecast
Markit’s chief economist Chris Williamson said this of the Eurozone’s data; ‘A stalling of economic growth in the second quarter raises concerns that the Euro is sliding into a triple-dip recession.’
Meanwhile, industry expert Rob Wood said this of Bank of England (BoE) rate hike bets; ‘Of course the data has moved about and the BoE has to respond, but their message seems to change a lot from month-to-month and that makes it hard to figure out how much weight to put on it.’
Finally, in reference to the UK’s GDP figures analyst Paul Hollingsworth asserted; ‘Today’s second GDP estimate confirmed that the economy recovery was strong, but became a little less balanced in the second quarter. Whilst the preliminary estimate of a 0.8% quarterly rise in GDP was left unrevised, there were a few tweaks to the output breakdown. For example, growth in industrial production was revised down from 0.4% to 0.3% and construction output is now thought to have held steady, where it was previously estimated to have fallen by 0.5%. Meanwhile, output in the services sector is still thought to have risen by a robust 1% in Q2.’
A lack of economic reports from the Eurozone restrained further movement in the Pound Sterling to Euro (GBP/EUR) exchange rate on Friday.
Some volatility in the Pound Sterling to US Dollar (GBP/USD) exchange rate could be caused by today’s University of Michigan Consumer Confidence index. If the measure is shown to have risen from 81.8 to 82.5 as economists’ forecast the GBP/USD could end the week trending lower.
Pound Sterling is currently trading against the Euro in the region of 1.2477 and trading against the US Dollar in the region of 1.6694