It looks like analysts in Wall Street did their homework! The preliminary reading of the UK’s GDP report came in just as expected at 0.8% in today’s London session.
It was one of the most anticipated economic reports for the week especially for those looking to trade the pound. While the BOE meeting minutes failed to give the currency a boost earlier this week, some traders are counting on the GDP data to help the pound rally. So how did the pound react?
Well, it barely did.
GBP/USD spiked up to 1.6992 at the wake of its release but quickly traded lower to tap a new four-week low 1.6960. Soon after, the currency pair was back up at its pre-release levels at 1.6983.
There was a lot of pessimism surrounding the data’s release. Naysayers argued that because of the ongoing political tensions in Europe, business activity probably slowed down. However, it turns out that the GDP report coming in just as expected was not enough to impress market participants and end the pound’s losing streak.
For the most part, it is because the figure really will not be enough to convince the Bank of England to consider raising interest rates this year.
Remember that earlier this week, the minutes of the most recent Bank of England meeting revealed that the monetary policy committee is not looking to tighten up credit conditions in 2014. However, some market participants hoped that this week’s retail sales and GDP reports would surprise to the upside and change the minds of policymakers.
So what’s next for the pound? Given that next week’s economic calendar barely has anything from the United Kingdom (only the manufacturing PMI is scheduled), we’ll probably see it trade based on market sentiment as well as on reports released from the U.S.
To contact the reporter of the story: Jonathan Millet at email@example.com.