Sterling Boosted by a Revised UK GDP Estimate
THE TAKEAWAY: UK GDP revised higher to -0.4% -> BoE’s Fisher says inflation higher than initially estimated -> Sterling erases earlier losses
The UK economic contraction during the second quarter was not as bad as initially estimated, according to the final gross domestic product estimate. The GDP was revised to -0.4% in Q2 from a previous estimate of -0.5%. The quarter’s GDP remained 1.5% lower than Q2 2012 according to the Office for National Statistic’s revised estimate.
The GDP is still reported as contracting for the third straight quarter, meaning that the UK continued a technical recession in the second quarter. Total business investment rose 0.9% in the second quarter, and was 3.1% higher than Q2 of 2011. BoE member Paul Fisher said earlier today that the UK GDP will be strong in the third quarter, but inflation will also be higher than the bank expected, due to rising energy prices.
Following the better GDP estimate, Sterling erased earlier losses that came after Fisher’s comments about inflation. $GBPUSD rose back towards 1.6200, where resistance could be provided by the key figure. Support could be provided by a year-long downward trend line near 1.6110.
GBPUSD 15-minute: September 27, 2012
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