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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.