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Forex News: Pound Mixed After U.K. GDP Data

Pound Mixed After U.K. GDP Data

08/12/2020 - 07:07:00 (RTTNews)

(RTTNews) - The pound came in mixed against its major trading partners in the European session on Wednesday, after a data showed that the U.K economy shrank less than forecast in the second quarter, as the government eased restrictions to tackle Covid-19.

While the currency rose against the yen and the greenback, it was lower against the euro and the franc.

Data from the Office for National Statistics showed that the UK economy contracted for the second straight time in the second quarter, but there was some pick up in June.

GDP plunged 21.7 percent on an annual basis in the second quarter, smaller than the economists' forecast of 22.4 percent.

In June, GDP growth accelerated to 8.7 percent from 2.4 percent in May.

Gross domestic product contracted by 20.4 percent sequentially in the second quarter, following a 2.2 percent drop in the first quarter. Economists had forecast a quarterly fall of 20.5 percent.

Nonetheless, the latest fall was the biggest contraction since the records began in 1955.

The pound spiked up to more than a 2-month high of 139.53 against the yen, after falling to 138.88 at 10:15 pm ET. The pound is seen finding resistance around the 141.00 mark.

The pound reversed from an early 5-day low of 1.3017 against the greenback, rising to 1.3068. Should the pound rises further, 1.34 is possibly seen as its next resistance level.

The U.K. currency dropped to a 2-day low of 0.9024 against the euro, down from a high of 0.8985 seen at 5:00 pm ET. The pound is likely to challenge support around the 0.92 level.

Data from Eurostat showed that Eurozone industrial production grew for the second straight month in June, following a marked relaxation of the coronavirus containment measures.

Industrial output grew 9.1 percent on month, slower than the 12.3 percent rise in May and the 10 percent rise economists' had forecast.

The GBP/CHF pair hit a 2-day low of 1.1916, after rising to 1.1998 in pre-European deals, which was its biggest level since August 4. The next possible support for the pound is seen around the 1.18 level.

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

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