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Forex News: Pound Advances As U.K. GDP Beats Forecasts

Pound Advances As U.K. GDP Beats Forecasts

05/12/2021 - 06:02:00 (RTTNews)

(RTTNews) - The pound appreciated against its major rivals in the European session on Wednesday, as the U.K. economy grew more than forecast in March.

Data from the Office for National Statistics showed that GDP rose 2.1 percent month-on-month in March, the fastest growth since August 2020.

That beat forecasts for an increase of 1.3 percent following the revised 0.7 percent rise in February.

The service sector grew 1.9 percent from February. Output in the production sector climbed 1.8 percent, as manufacturing grew for a second consecutive month, at 2.1 percent.

At the same time, the construction sector expanded 5.8 percent in March, driven by growth in both new work and repair and maintenance.

Another data showed that the visible trade gap widened to GBP 11.7 billion from GBP 10.5 billion in February.

The surplus on services came in at GBP 9.74 billion. Consequently, the total trade deficit rose to GBP 1.96 billion from GBP 856 million a month ago.

Further underpinning sentiment was rising European shares amid strong earnings reports and hopes of a swift economic recovery from the pandemic.

The pound recovered to 1.4149 against the greenback, from a low of 1.4108 seen at 11:45 pm ET. The pound is likely to find resistance around the 1.43 level.

The pound reached as high as 153.93 against the yen, up from Tuesday's close of 153.57. The pound is seen finding resistance around the 156 region.

Preliminary data from the Cabinet Office showed that Japan's leading index rose to the highest level in seven years in March.

The leading index, which measures the future economic activity, grew to 103.2 in March from 98.9 in February.

The pound touched the key 1.2800 level against the franc for the first time since April 21. If the pound rises further, 1.30 is possibly seen as its next resistance level.

The pound spiked higher to its highest level since April 6 against the euro, at 0.8575. The next possible resistance for the pound is seen around the 0.84 level.

Final data from Destatis showed that Germany's consumer price inflation hit a two-year high in April.

The consumer price index rose 2.0 percent year-on-year following 1.7 percent increase in March.

Looking ahead, U.S. CPI and monthly budget statement for April are scheduled for release in the New York session.

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