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UK GDP as expected with 0.5% – GBP/USD rises

It could have been worse: The UK economy grew by 0.5% q/q and 1.9% y/y, exactly as expected according to the preliminary release. It seems like markets were expecting a worse outcome, given data was not that positive of late.

GBP/USD is  releasing a sigh of relief and advancing, getting closer to  1.43.

As with many other developed economies, manufacturing weighs down on growth while services lead the way. The 2015 GDP report card shows 2.2% growth in Britain. 2014 was better with 2.9%.

The UK was expected to report a growth rate of 0.5% q/q in Q4 2015, following a slower rate of 0.4% in Q3. Year over year, a slower rate of 1.9% was expected to follow the 2.1% figure seen beforehand. These are preliminary figures, which  undergo two revisions.

GBP/USD traded around 1.4260 before the publication. Support awaits at 1.4125 and resistance at 1.4365.

Preview: trading the UK GDP with GBP/USD

After the BOE was poised to raise rates after the Fed during most of 2015, the latter part of the year saw weaker UK data and lower expectations for a hike, weighing on sterling. The most recent blow came from BOE governor Carney. He said it is not the time to raise rates. This hurt the pound quite badly.

Here is how this recovery looks on the chart:

GBPUSD up on GDP January 28 2016

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.