British GDP Provides Upside Surprise, GBP/USD Doesn’t Celebrate


The British economy grew by 0.5% in Q3 2011 according to the initial report. Early expectations stood on a growth rate of 0.4%. Two revisions will follow this initial publication.

GBP/USD fails to celebrate, as more recent data from the manufacturing sector provided a bigger surprise and dropped sharply. The pound is now dropping towards low support, currently trading at 1.5950. Support is at 1.5910.

In Q2, the British economy hardly grew: only 0.1%. Q1 saw a 0.5% gain, but it followed contraction of 0.5% in Q4 2010, so the general picture is largely of stagnation.

Manufacturing PMI for October badly disappointed by falling under the 50 point line separating between growth and contraction. The index fell to 47.4 points, while a slide to 50 was predicted. This gave the initial blow to the pound.

The more recent data from the manufacturing sector has the upper hand, especially in the current environment, where fear took over once again, as the EU Summit results were digested.

Also in Britain, the Index of Services rose by 0.4%, significantly lower than 1.4% that was expected. This is a minor indicator.

GBP/USD traded under the round 1.60 line prior to the release. It made a move upwards yesterday, on the last day of the month, a move that didn’t coincide with the euro’s moves for a change.

Support is at 1.5910, followed by 1.5850 and 1.5780. Resistance is at 1.6110, followed by 1.62. For more on the pound, see the British pound forecast.

Tomorrow, Construction PMI is expected to show that this sector is hardly growing.

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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.