News Column

Pound Mixed Following UK GDP Data

June 27, 2014



BRUSSELS (Alliance News) - The British currency showed a mixed trading against the other major currencies in the European session on Friday after the release of UK GDP data for the first quarter.

The Office for National Statistics showed that gross domestic product grew at 0.8% from the fourth quarter, unrevised from the second estimate released on May 22. At the same time, annual growth was revised down to 3% from 3.1%.

The balance of payment data showed that the current account deficit narrowed to GBP 18.5 billion in the first quarter from a revised GBP 23.5 billion in the fourth quarter. The deficit was equivalent to 4.4% of GDP.

Gross fixed capital formation increased GBP 1.3 billion or 2.4% to GBP 56.9 billion, the highest level since the fourth quarter of 2008. At the same time, business investment rose GBP 1.6 billion or 5% to GBP 33.4 billion.

The Bank of England Governer Mark Carney told to BBC Radio today that the Britain's economy is still relatively vulnerable, citing high levels of household debts. He also suggested that the "new normal" or interest rates is likely to be about 2.5% when rates start to increase.

The pound fell to a 2-week low of 172.51 against the yen, from an early high of 173.17, and held steady thereafter.

Nationwide consumer prices in Japan accelerated 3.7% on year in May, the Ministry of Internal Affairs and Communications said. The headline figure was in line with expectations and up from 3.4% in April.

On a monthly basis, overall inflation and core CPI both added 0.4%.

Against the euro, the pound dropped to 0.7992 from an early high of 0.8004 and held steady thereafter. The pair was quoted at 0.7985 at yesterday's close.

Eurozone economic confidence weakened unexpectedly in June from a 34-month high in May, survey results from European Commission showed.

The economic sentiment index fell to 102 in June from revised 102.6 in May. It was forecast to rise to 103. The decline resulted from a deterioration in industry, construction and, to a lesser extent, consumer confidence.

Moving away from an early multi-day high of 1.7050 against the US dollar, the pound fell to 1.7013 held steady thereafter. The pair closed yesterday's deals at 1.7022.

The pound recovered to 1.5215 against the Swiss franc, from an early low of 1.5156. The pound was trading at 1.5204 against the franc at yesterday's close. If the pound extends its uptrend, it is likely to find resistance around the 1.53 area.

A measure of the future situation in the Swiss economy rose in June after three straight months of decline, figures from the Swiss Economic Institute KOF showed.

The KOF economic barometer rose to 100.4 in June, more than the consensus estimate of 100. In May, the indicator was at 100.1, revised up from 99.8.

Looking ahead, German preliminary CPI for June is set for release at 8:00 am ET.

In the New York session, Reuters/University of Michigan's final consumer sentiment index for June is due.



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Source: Alliance News


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