Pound Rises On Better-than-expected UK GDP Data

(RTTNews) - The British pound strengthened against other major currencies in the early European session Friday, after data showed that the U.K. economy logged a surprise growth in the second quarter.

Data from the Office for National Statistics showed that the U.K. gross domestic product registered a sequential growth of 0.2 percent in the second quarter, following a 0.1 percent rise in the previous quarter. Economists were looking for stagnation in the second quarter.

On a yearly basis, GDP rose 0.4 percent in the second quarter, which was bigger than economists' forecast of 0.2 percent.

In June, GDP expanded 0.5 percent, in contrast to the 0.1 percent fall in May. The pace far exceeded the 0.2 percent growth expectations.

Year-on-year, the UK economy rebounded 0.9 percent after shrinking 0.3 percent in May. The rate was also above economists' forecast of 0.5 percent. Another data from the ONS showed that the visible trade deficit narrowed more-than-expected to GBP 15.5 billion from GBP 18.4 billion in May. The deficit was forecast to fall to GBP 16.2 billion. The trade in services showed a surplus of GBP 10.66 billion compared to GBP 10.75 billion in the previous month.

As a result, the total trade balance posted a shortfall of GBP 4.78 billion, smaller than the GBP 7.66 billion deficit seen a month ago.

The Sterling held steady against other major currencies in the Asian trading today.

In the European trading, the pound rose to 0.8646 against the euro and 1.2723 against the U.S. dollar, from an early 3-week low of 0.8670 and an 8-day low of 1.2666, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.84 against the euro and 1.30 against the greenback.

Against the Swiss franc and the yen, the pound edged up to 1.1149 and 184.12 from early lows of 1.1109 and 183.45, respectively. The pound may test resistance around 1.13 against the franc and 186.00 against the yen.

Looking ahead, U.S. PPI for July, German current account data for June, U.K. NIESER GDP tracker data for July, U.S. University of Michigan's preliminary consumer sentiment data for August and U.S. Baker Hughes oil rig count data are slated for release in the New York session.