Talking Points:
- 1Q year-on-year GDP expanded 2.1% vs 2.0% expected
- Industrial Production fell 0.4%, Services expanded 0.6%
- British Pound higher versus other major currencies on the news
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The British Pound nudged higher versus other major currencies (at the time this report was written) after today’s Preliminary 1Q’16 Gross Domestic Product (GDP) figures showed the UK’s economy grew slightly better than expected. GDP expanded 0.4% in the three months to March, as was expected by economists, compared the prior figure of 0.6% growth in Q4’15. The year-on-year figure came at 2.1%, as the prior 2.1%, but better than the expected 2.0%.
Looking into the report, the Office for National Statistics indicated that Output increased in services by 0.6% in Q1’16, while the other three main industrial groupings within the economy decreased, with production falling by 0.4%, construction output by 0.9% and agriculture by 0.1%.
As was mentioned recently by DailyFX Chief Currency Strategist John Kicklighter, economic performance in the UK is quite similar to the US, with the main difference being fears from the possibility of a ‘Brexit’.
The Pound opened this week’s trading with a gap to the upside, perhaps on speculation that risk premium surrounding the referendum was a little too far out. Easing back on protection form a possible ‘Brexit’ may have caused the rebound, with today’s GDP figures seen as a possible catalyst for more upside conviction should the numbers come out strong.
Taking this into consideration, at appears that the figures failed to disappoint the market, and the slight beat to expectations was sufficient to keep the British Pound elevated versus other major currencies.
DailyFX Sr. Technical StrategistJamie Saettele identified 1.5000 as a possible key resistance for the GBP/USD.
GBPUSD 5-Minute Chart: April 27, 2016
--- Written by Oded Shimoni, DailyFX Research
