- GBP/USD remains stable after mixed GDP and industry data released by the UK.
- UK GDP expanded by 1.0% in the third quarter, faster than the 0.7% growth in the second quarter.
- UK industrial and manufacturing production fell by 0.5% and 1.0% respectively in September.
GBP/USD snapped a five-day losing streak and was trading around 1.2680 in early European trading on Friday. The pair remained stable following the release of the UK's combined gross domestic product (GDP) and industrial statistics.
The UK economy grew 0.1% sequentially in the three months to September, following a 0.5% expansion in the second quarter. This growth was lower than market expectations of a 0.2% increase. UK GDP rose 1.0% year-on-year in the third quarter, in line with expectations but above the 0.7% growth recorded in the second quarter.
Britain's monthly GDP contracted by 0.1% in September, reversing the 0.2% expansion in August and falling short of expectations for 0.2% growth. The services index for the three months to September was stable at 0.1% 3M/3M, unchanged from the previous value. However, both industrial production and manufacturing production decreased in September, decreasing by 0.5% and 1.0% from the previous month, respectively. These numbers were lower than expected.
The US dollar (USD) fell slightly following Fed Chairman Jerome Powell's comments on Thursday. Fed Chair Jerome Powell said the U.S. economy has performed “remarkably well” recently, giving the Fed the flexibility to gradually lower interest rates. Meanwhile, Richmond Fed President Thomas Barkin said that while the Fed has made strong progress so far, there is still work to do to maintain momentum.
Furthermore, the US Producer Price Index (PPI) in October increased by 2.4% compared to the same month last year, up from the revised 1.9% increase in September (previously 1.8%) and higher than the market estimate of 2.3%. Meanwhile, core PPI, which excludes food and energy, rose 3.1% year-on-year, slightly higher than the 3.0% expected.
The US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, is trading around 106.70. This is down from the year-to-date high of 107.06 hit on Thursday. This decline can be attributed to a slowdown in “Trump trading.”
economic indicators
Gross Domestic Product (YoY)
Gross domestic product (GDP) announced by the Cabinet Office national statistics A measure of the total value of all goods and services produced in the United Kingdom during a particular period, on a monthly and quarterly basis. GDP is considered the main indicator of economic activity in the UK. The YoY measure compares economic activity in a reference quarter to the same period a year ago. Generally, an increase in this indicator is bullish for British Pound Sterling (GBP), while a low value is considered bearish.
