No surprises from the UK GDP: q/q growth is 0.8% and year over year it is 3.1%. The United Kingdom was expected to report a quarterly growth rate of 0.8% in Q2 2014. Year over year, a growth rate of 3.1% was estimated. This is the initial publication for the quarter and two revisions are scheduled.
GBP/USD was trading at around 1.6980 before the publication, staying shy of the 1.70 level it lost earlier in the day. The pair is ticking up, erasing previous drops, but is unable to recapture 1.70.
Update: after the initial move higher, cable sinks lower.
The British economy is on a solid recovery path for over a year. It enjoyed a growth rate of 0.8% in Q1 2014, 0.7% in Q4 2014, 0.8% in Q3 and 0.8% in the second quarter of 2013. This is not only solid but also very steady growth.
The accompanying Index of Services figure was expected to advance by 1% after 0.9% beforehand. The actual result is also as expected: 1%.
The pound suffered earlier in the week: the hesitant and unanimous MPC meeting minutes weighed on the pound, and the disappointing retail sales (only +0.1%) already sent it to the edge. The final push beyond the 1.70 cliff came from the better than expected US jobless claims, that dropped to an 8 year low of 284K..
Despite weaker US new home sales (406K annualized) later in the day, GBP/USD was unable to recover.
Support is found at 1.6940, followed by 1.6850. Resistance awaits at 1.70, followed by 1.7040 and 1.71. For more levels, events and analysis, see the GBPUSD prediction.
And for reference, here is the preview: GBP/USD: Trading the British Preliminary GDPGet the 5 most predictable currency pairs