British pound soars on GDP
The British pound soared in the European and North American sessions following the release of revised GDP estimates. The British economy accelerated 0.8 percent in the third quarter and at an annualized rate of 1.5 percent, in-line with initial estimates, according to the Office for National Statistics.
Gross domestic product is a measure of the total value of goods and services produced in the economy. It is the most direct gauge for economic growth. Britain’s GDP has expanded for three consecutive quarters after the nation barely avoided a triple-dip recession in 2012.
The British pound approached a 52-week high against the US dollar, hitting 1.6331 US in the European session. The GBPUSD pair consolidated at 1.6278 in North America, a gain of 64 pips. The US dollar was relatively well bid against a basket of its major competitors despite a mixed bag of economic data. Durable goods orders fell 2 percent in October, as businesses delayed investment spending amid the government shutdown. Separately, unemployment benefits fell to 316,000 last week, a sign more businesses are retaining employees during the holiday season.
Elsewhere, the pound was unaffected by stronger than forecasted German consumer confidence. The EURGBP declined 31 pips to 0.8339. The common currency has been under pressure for several weeks, as the European Central Bank searches for ways to bring inflation back toward target levels. The ECB is between a rock and a hard place; euro area stagnation is forcing the central bank to consider unconventional policy tools, which may or may not have the desired effects.
Sterling outperformed all 16 of its major counterparts, according to Bloomberg News. The GDP report showed the UK economy is relying on domestic forces for growth, a trend that bodes well for its safe haven currency. Sterling has advanced 7.5 percent in the past six months, making it the best performing developed-nation currency over that period.
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