GBP/USD Spikes Higher But Quickly Reverses on Upbeat 3Q UK GDP
- 3Q year-on-year GDP expanded 2.3% vs 2.1% expected
- Growth in services expanded 0.8% while other sectors fell
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The British Pound spiked higher, but then quickly reversed versus other major currencies (at the time this report was written) after today’s Preliminary 3Q’16 Gross Domestic Product (GDP) figures showed the UK’s economy grew better than expected.
GDP expanded 0.5% in the three months to September, better than the 0.3% print expected by economists, compared the prior figure of 0.7% growth in Q2’16. The year-on-year figure came at 2.3%, better than the prior and expected 2.1% print.
Looking into the report, the Office for National Statistics (ONS) indicated that the pattern of growth continues to be broadly unaffected following the EU referendum with a strong performance in the services industries (+0.8% in Q3) offsetting falls in other industrial groups. Output decreased in the other 3 main industrial groups.
The numbers might be an indication that the UK’s economy has held up better than many initially expected, but services were again the main driving force with worrying signs in other sectors. In turn, the British Pound spiked higher versus other majors in the time of the release, perhaps due to the fact that the numbers were indeed better than expected, but then quickly reversed, potentially with gains being capped as sellers emerged on “hard-Brexit” concerns and the economy’s reliance on the service sector.
GBPUSD 5-Minute Chart: October 27, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail firstname.lastname@example.org
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.