The final read for UK GDP growth for Q4 shows a growth rate of 0.6%, better than 0.5% reported beforehand and expected. The year over year growth rate stands at 3% according to the latest release, up from 2.7%. This data overshadows the miss on the UK current account: a deficit of 25.3 billion in Q4 instead of 22 billion expected.
GBP/USD is on the rise, attempting to rise above 1.48. Update: after the initial reaction, GBP/USD is erasing its gains.
Among the details, business investment is revised to the upside, which is a good indication for the future. Regarding the current account, it is important to remember that also the previous figures missed expectations.
The UK was expected to confirm the previous GDP reads of 0.5% growth in Q4 2014. The UK current account for Q4 was expected to show a deficit of 21.2 billion compared with 27 billion in Q3 (before revisions).
GBP/USD was on the back foot, trading around 1.4760, mostly due to the strength of the US dollar in the last trading day of the quarter.
The UK is officially in election mode: general elections are held on May 7th and the picture remains quite mixed after high profile TV interviews. A scenario in which neither major party is able to win an absolute majority creates some worries in markets.
Apart from that, the UK economy seems to be doing OK, with optimism coming from the central bank. Low inflation is attributed to oil prices and the Bank does not fear deflation.
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