Pound Rises As U.K. Economy Rebounds
11 July 2024 - 2:50PM
RTTF2
The British pound strengthened against other major currencies in
the European session on Thursday, after U.K. economy rebounded at a
faster-than-expected pace in May underpinned by broad-based
expansion in services, manufacturing and construction
industries.
Real gross domestic product grew 0.4 percent in May after
showing no growth in April, the Office for National Statistics
reported. The actual growth was double the expected 0.2 percent
expansion.
Services output expanded 0.3 percent in May and became the
biggest contributor to the growth.
Industrial production grew 0.2 percent, reversing a fall of 0.9
percent in April. Within in total production, manufacturing
rebounded 0.4 percent following a 1.6 percent decline. At the same
time, construction output was up 1.9 percent.
Another official data today showed that the visible trade
deficit narrowed to GBP 17.9 billion in May from GBP 19.4 billion
in April. Meanwhile, the surplus on services trade remained almost
unchanged at GBP 13 billion.
As a result, the total trade deficit narrowed to GBP 4.89
billion from GBP 6.4 billion in the previous month.
The European stock markets traded higher as traders eye
September for the Federal Reserve's first rate cut.
"Our undertaking is to make decisions when and as they need to
be made, based on the data, the incoming data, the evolving outlook
and the balance of risks, and not in consideration of other
factors, and that would include political factors," Fed Chair
Jerome Powell said in a hearing before the House Financial Services
Committee.
There are also expectations that a U.S. government report due
later in the day will show inflation continued to moderate in
June.
In the European trading today, the pound rose to a 17-year high
of 208.11 against the yen and a 4-month high of 1.2873 against the
U.S. dollar, from early lows of 207.58 and 1.2849, respectively. If
the pound extends its uptrend, it is likely to find resistance
around 209.00 against the yen and 1.29 against the greenback.
Against the Swiss franc and the euro, the pound advanced to
nearly a 1-1/2-month high of 1.1573 and nearly a 1-month high of
0.8420 from early lows of 1.1553 and 0.8443, respectively. On the
upside, 1.17 against the franc and 0.82 against the euro are seen
as the next resistance levels for the pound.
Looking ahead, U.K. NIESR monthly GDP tracker data, U.S.
inflation data for June, U.S. weekly jobless claims data and U.S.
Federal budget balance report for June are slated for release in
the New York session.
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