Currency Market Updates | UK GDP Above Expectations

UK GDP Above Expectations

UK GDP Above Expectations

28, August 2009

This morning we have seen Q2 GDP come in better than expected at -0.7% against the expected -0.8%. Although still a poor reading the fact that it has come in better than expected will be a welcome relief for sterling following a week to forget. In the markets we have not seen a huge reaction to the news so far although we are up against the USD and the euro from yesterdays lows.

Crucially GDP/EUR has popped its head back over the 1.1363 level which is important and sterling has gained against the JPY and the USD. With a bank holiday in store for Monday we could see some profit taking in favour of the pound later today after a heavy week of selling sterling.

Yesterday we saw improved data in relation to UK Nationwide House prices which jumped 1.6% and was the largest increase in two and a half years so good news but possibly related to less supply. With interest rates remaining low this has enabled more people to keep up repayments on their homes and avoid selling in a falling market.

In the US GDP came in better than expected prolonging the positive feedback from the US economy.

A major gainer of late in the markets has been the AUD jumping back above 84 against the USD and pushing GBP to a low of 1.9315. Expect volatility later today and we should see some profit taking on sterling providing a move towards 1.15 against the euro and 1.64 on the USD.. EUR/USD is trading well at 1.4350 after a big jump overnight, however it struggles at the 1.44 level and expect retracement at this area.

Report by Phil McHugh.

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Currency Market Updates are compiled by Tom Nadir.

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