News Column

Pound Advances As UK Q2 GDP Growth Meet Forcasts

July 25, 2014

BRUSSELS (Alliance News) - The pound strengthened against the other major currencies in the early European session on Friday after data showed that the UK GDP grew in the second quarter underpinned by services and manufacturing.

The figure matched economists' expectation.

Preliminary data from the Office for National Statistics showed that the UK gross domestic product grew 0.8% sequentially in the second quarter, the same rate as seen in the first three months of the year.

GDP grew 3.1% from the same quarter a year ago, also in line with forecast.

The production side breakdown of GDP showed 1% quarter-on-quarter increase in services and 0.4% expansion in production. Meanwhile, construction fell 0.5% and agriculture dropped 0.2%.

Another report from ONS showed that services output advanced 3.3% year-on-year in May. On a monthly basis, services output climbed 0.3%, it said.

The pound rose to a 2-day high of 173.15 against the yen, from an early low of 172.78. At yesterday's close, the pound was trading at 172.91 against the yen. On the upside, 173.54 is seen as next resistance level for the pound.

Data from the Ministry of Internal Affairs and Communications showed that consumer prices in Japan climbed 3.6% on year in June. That topped forecasts for 3.5%, also slowing from 3.7% in May.

Moving away from an early low of 0.7933 against the euro, the pound advanced to 0.7912. The pair was quoted at 0.7924 at yesterday's close. The next possible upside target for the pound lies around the 0.798 level.

Data from the Ifo Institute showed that Germany's business confidence declined for a third successive month in July and at a faster-than-expected pace.The Ifo Business Climate Index fell to 108, which was worse than the 109.4 score forecast by economists. In June, the index had eased to a six-month low of 109.7.

Against the Swiss franc, the pound edged up to 1.5359 from an early low of 1.5316. The pair was quoted at 1.5327 at yesterday's close. Continuation of bullish trend may lead the pound to a resistance around the 1.54 mark.

The pound recovered to 1.6991 against the US dollar, from an early low of 1.6966. The pair was quoted at 1.6985 at yesterday's close. If the pound extends gain, it may find resistance at the 1.70 level.

Looking ahead, US durable goods orders for June are due to be released in the New York session.

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Source: Alliance News

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