The output of the economy in the UK dropped by 0.3% in the fourth quarter, according to the initial release. Expectations stood on a drop of 0.1% after a growth rate of 0.9% in Q3 – the “Olympic leap”
GBP/USD is falling, so far not breaking lower. Update: Cable temporarily dipped under 1.5750, below previous lows seen yesterday, but has stabilized a bit higher.
This figure will be revised twice, but the initial publication has a very strong impact. There were hopes that the UK would enjoy two consecutive quarters of growth. These hopes are probably gone.
After falling below the round 1.60 line, GBP/USD has been sliding lower, grinding its way down. The break below 1.58 was significant.
Further below, 1.56 is an important line of support. 1.58 is now weak resistance on the topside.
For more on the pound, see the GBPUSD forecast.
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