Pound Euro Rate Surges On Best UK GDP Data Since 2007

Published: Thursday, 25 October 2012 15:00 BST - Written by Ben Hughes

STORY LINK Pound Euro Rate Surges On Best UK GDP Data Since 2007

The Pound received a much-needed boost earlier today when the British government’s official GDP estimate for Q3 showed a quarterly increase of 1.0% - well ahead of analysts’ expectations of a 0.6% print. The figure showed that the UK economy, which had spent the first half of 2012 in a deep slumber, grew by its largest quarterly amount since 2007 during the three months to the end of September. The uptick in activity was attributed to an increased spending by British citizens and an influx of foreign visitors thanks to the London 2012 Olympic Games and the Queen’s Jubilee celebrations. Whether Britain’s fragile economy can move forward and use the momentum of these one-off events to build sustained growth into 2013 remains to be seen.

The Pound has made gains on the day, but the forward move for Sterling has been less pronounced than might have been expected, given the spectacular nature of this morning’s growth numbers. Investors remain wary of the tried and tested market adage that ‘what should go up, and doesn’t go up, can only come down’. The GBP EUR exchange rate currently sits at 1.2429 and the GBP USD exchange rate had broken to 1.6143 this afternoon.

The other major risk event of the day was September’s Durable Goods Orders data in the US. The figure convincingly outstripped analysts’ expectations of a 7.5% showing. Members of the Fed’s policy committee will see the release as vindication of their ongoing extraordinary monetary policy measures, as the monthly Durable Goods data, which quantifies the volume of ‘larger ticket’ purchases in an economy, is seen as a reliable bell-weather of both business and consumer confidence.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts