Forex News: Pound Rises As U.K. GDP Growth Beats Expectations

Pound Rises As U.K. GDP Growth Beats Expectations

(RTTNews) - The British pound strengthened against other major currencies in the European session on Thursday, after the U.K. economy logged a robust growth in February before the outbreak of the war in the Middle East, which poses significant downside risks to outlook.

Data from the Office for National Statistics showed that the U.K. Gross domestic product logged a monthly growth of 0.5 percent in February, outpacing the 0.1 percent expansion in January. Economists had forecast the growth to remain unchanged at 0.1 percent.

On the production-side, the dominant service sector expanded 0.5 percent and construction output advanced 1.0 percent in February.

Industrial production grew 0.5 percent, following successive falls of 0.1 percent in January and a 0.4 percent drop in December. Meanwhile, manufacturing output edged down 0.1 percent, reversing January's 0.2 percent increase.

Compared to the same period last year, GDP advanced 1.0 percent in February.

On a yearly basis, industrial production slid 0.4 percent, and manufacturing dropped 0.5 percent in February.

In the three months to February, real GDP expanded 0.5 percent, following a growth of 0.3 percent in the three months to January. GDP grew 0.8 percent from the same three months a year ago.

The visible trade deficit widened to GBP 18.79 billion in February from GBP 15.1 billion in January, the ONS said in a separate report. Exports of goods dropped 3.9 percent, while imports increased 4.7 percent from the prior month.

The total trade balance showed a shortfall of GBP 720 million compared to a surplus of GBP 3.0 billion a month ago.

European stocks moved modestly higher amid optimism the upcoming talks between officials from Iran and the U.S. will result in a potential resolution to the Middle East conflict.

According to reports, the warring nations are considering extending the ceasefire by two weeks in order to allow more time for talks.

Investors also digested corporate earnings updates and the latest batch of economic data from the region.

In the European trading today, the pound rose to 1.3582 against the U.S. dollar, from an early low of 1.3561. Earlier, the pound had risen to nearly a 2-month high of 1.3595 against the greenback. The pound may test resistance around the 1.37 region.

Against the yen, the pound advanced to 215.73 from an early low of 215.13. The next possible upside target is seen around the 213.00 region.

Against the Swiss franc and the euro, the pound edged up to 1.0610 and 0.8691 from early lows of 1.0597 and 0.8702, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.07 against the franc and 0.85 against the euro.

Looking ahead, U.K. NIESR Monthly GDP Tracker for March, ECB monetary policy meeting accounts, U.S. Weekly jobless claims data, U.S. Philadelphia Fed manufacturing index for April and U.S. industrial production for March are slated for release.

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