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British Pound Rises Despite GDP Miss

British Pound Rises Despite GDP Miss

2017-04-28 08:48:00
Oliver Morrison, Analyst
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Talking Points

-UK GDP rises 0.3% in January to March, missing estimates of 0.4%.

- But the Pound holds its strength

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

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The British Pound has held its recent gains despite economic growth slowing sharply in the first three months of this year, according to the Office for National Statistics.

UK GDP rose by 0.3% in January to March, missing estimates of 0.4%. That’s down from 0.7% in the final three months of 2016, and the slowest reading since the first three months of last year. Year-on-year, GDP expanded 2.1%, missing the 2.2% forecast, but rising from 1.9% y-o-y last quarter.

It follows earlier data from GfK showing that UK consumer confidence slowed slightly in April and entered negative territory, but remained relatively stable. UK house price growth, meanwhile, hit a four-year low, according to mortgage lender Nationwide.

Robert Gardner, Nationwide’s Chief Economist, blamed rising inflation, which is driving down real incomes. “There may also be more fundamental reasons for the slowdown. House price growth has been outstripping earnings growth for a sustained period of time, steadily eroding affordability on a number of metrics. For example, the typical house price is currently 6.1 times average earnings, well above the long run average of 4.3 times earnings, and close to the all-time high of 6.4 times recorded in 2007.”

Before the GDP data release at 0930BST, Sterling had hit its highest level against the US dollar since last September. And it looks to have held on to those gains.

GBPUSD 15-Minute Chart (Intraday April 28)

British Pound Rises Despite GDP Miss

Chart by IG

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at oliver.morrison@ig.com

Follow Oliver on Twitter @OPWMorrison

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