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Forex News: Pound Dips As U.K. GDP Growth Slows To

Pound Dips As U.K. GDP Growth Slows To 5-year Low

04/27/2018 - 05:55:00 (RTTNews)

(RTTNews) - The pound drifted lower against its key counterparts in early European deals on Friday, as a data showed that the U.K. economic growth slowed to more than a five-year low in the first quarter, lessening expectations for the likelihood of a Bank of England rate hike in May.

Data from the Office for National Statistics showed that gross domestic product grew only 0.1 percent in the first quarter, the weakest since the fourth quarter of 2012. GDP was expected to rise 0.3 percent. The economy had expanded 0.4 percent in the fourth quarter.

On a yearly basis, GDP expanded 1.2 percent in the first quarter, slower than the expected growth of 1.4 percent.

Another report from ONS showed that in the three months to February, services output increased 0.4 percent compared with the three months ending November 2017.

In February, services output dropped 0.2 percent from the previous month.

Early in the day, survey data from GfK showed that British consumer confidence weakened in April, after improving in the previous month.

The consumer sentiment index dropped to -9 in April from -7 in March. Meanwhile, the index was forecast to remain stable at -7.

The currency rose against its most major counterparts in the Asian session amid rising appetite on strong quarterly results.

The pound depreciated 0.9 percent to a 1-1/2-month low of 1.3802 against the greenback, after having advanced to 1.3934 at 11:30 pm ET. The pair was worth 1.3913 when it closed deals on Thursday. If the pound continues its decline, 1.35 is possibly seen as its next support level.

Reversing from an early high of 152.28 against the yen, the pound dropped to a 4-day low of 150.96. At yesterday's close, the pair was valued at 152.07. Next key support for the pound is likely seen around the 148.5 level.

The Bank of Japan kept its monetary stimulus unchanged as widely expected.

Governor Haruhiko Kuroda and his board members decided by an 8-1 majority vote to hold its target of raising the amount of outstanding JGB holdings at an annual pace of about JPY 80 trillion.

The U.K. currency came off from an early high of 0.8682 against the euro, falling as low as 0.8744. The euro-pound pair finished Thursday's deals at 0.8696. The pound is seen challenging support around the 0.90 area.

Survey data from European Commission showed that Eurozone economic sentiment remained stable in April.

The economic sentiment index held steady at 112.7 in April. The score was forecast to drop to 112.0.

Pulling away from an 8-day high of 1.3793 hit at 2:45 am ET, the pound declined to 1.3686 against the franc. The pair was valued at 1.3759 when it closed deals on Thursday. The pound is likely to find support around the 1.34 level.

Looking ahead, U.S. advanced GDP data for the first quarter and University of Michigan's final consumer sentiment index for April will be out in the New York session.

At 10:00 am ET, the Bank of England Governor Mark Carney speaks at the launch of the BOE's econoME education program in London.

For comments and feedback: contact editorial@rttnews.com

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