Fundamental Comment

Pound rises after upbeat UK GDP data

Pound rises after upbeat UK GDP data

The pound rose on Monday after the monthly GDP figures eased fears that the U.K. economy would succumb to its first recession since the financial crisis.

As of 09:47 GMT, the British pound surged against the U.S dollar by 0.55 percent at $1.2348, while the highest level recorded during the session was at $1.2355.

The Office for National Statistics said that economic output in July alone was 0.3 percent, the largest increase since January, topping analysts’’ projections 0.1 percent growth.   

In the three months to July, the economy recorded no growth, following a 0.2 percent drop in the second quarter. Economists had penciled in a contraction of 0.1 percent. 

Britain’s services index, which represents about 80 percent of British economic output, rose 0.3 percent in July after four months of stagnation, it is the biggest rise since November 2018.

Manufacturing production grew by 0.3 percent in July, compared to both previous and predicted readings of -0.2 percent and -0.3 percent respectively.

On the political front, a legislation to prevent a no-deal Brexit is predicted to gain formal consent today, where Prime Minister Boris Johnson is likely to fail in his second attempt for a general election.

Boris Johnson’s office has confirmed that directly after Monday’s business is concluded, Parliament will be suspended until October 14.

Last week, the pound rose more than 1 percent versus the green currency after falling to its lowest level October 2016 at 1.1958.

Versus the euro, the pound pushed the EURGBP lower to a low of 0.8904, the lowest level since July 25, ahead of ECB meeting on Thursday.

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