The slow growth in the UK is confirmed in the second release: 0.3% q/q, 1.7% y/y. A disappointment was seen in the preliminary measure of investment: 0% against 0.2%. Services met expectations with 0.5%. Mortgage approvals came out at 41.6K, similar to previous levels.
GBP/USD is slipping under 1.28, which it struggled to recapture earlier. EUR/GBP is moving up from support.
Euro/pound remains at the highest levels since 2009. Here are the levels to watch on the cross.
The second estimate of UK GDP was expected to confirm the initial read of 0.3% q/q and 1.7% y/y. The level of investment was expected to rise by 0.2% and services by 0.5%.
GBP/USD was bouncing from the lows, moving above 1.28 ahead of the publication. But in general, Sterling is weak. EUR/GBP is trading at the highest level since 2009. The cross reached 0.9410 in October 2009 and now trades around 0.92.
The British economy enjoyed robust growth during 2016, before and after the EU Referendum around the middle of the year. Growth rates halved in 2017. Brexit begins biting: the lower value of the pound pushes inflation higher and consumption of non-essential products lower. The upside in exports is not enough to compensate.
The Bank of England is reluctant to raise rates despite higher inflation and rapid growth in private credit. The BOE does not want to hurt the economy.
More: GBP: Brexit Round 3 Showdown Weighing On GBP; What’s Next? – BTMU
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