Talking Points
- The first look at UK 4Q growth data beat market expectations as Brexit fears over a slowdown fail to materialize.
- GBPUSD retains its recent gains as markets wait for PM Theresa May’s Brexit White Paper.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.
Preliminary UK GDP data show the economy pushing ahead with fourth quarter Q/Q growth of 0.6% and annualized growth of 2.2%, both a fraction better than market expectations. According to the Office for National Statistics,
“Strong consumer spending supported the expansion of the dominant services sector and although manufacturing bounced back from a weaker third quarter, both it and construction remained broadly unchanged over the year as a whole.”
Today’s data underline the current resilience in the UK economy post-Brexit with the UK 2016 growth rate the fastest in the G7and shows the UK economy growing faster in the post-Brexit second half of 2016. Today’s figures also beat the Bank of England’s projections of 0.4% fourth-quarter growth, something that BOE Governor Mark Carney will need to address at next week’s Inflation Report.
Sterling edged fractionally lower on the release, giving back some of its recent strong performance against the US Dollar and the Euro, as traders now wait for the release of the Brexit White Paper from the UK government. The White Paper will give the country a clearer picture to PM Theresa May’s wishes as she readies herself for break-up talks with the European Union. The Prime Minister will also meet US President Trump Friday for wide ranging discussions, likely to centre on trade and global security.
Chart: GBPUSD 1-Minute Timeframe (January 26, 2017)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.cawley@ig.com
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