UK GDP surprises to the upside providing respite for the Pound

Daily Currency Update

The pound has been under pressure over the last 7 months, as concerns mounted that the UK economy was the worst performing in the G7, coupled with warnings from the Bank Of England that a long deep recession could be looming for the UK economy. However, today's GDP posting provides some respite for the pound, as these concerns now ease off. UK GDP grew 0.3% month on month in January versus the 0.1% expected and a -0.5% previous reading, which propelled the pound this morning after a week when it was on the back foot.

There were mixed readings elsewhere, with the industrial sector activity showing a contraction in January as shown by data published by Office for National Statistics (ONS) today. Manufacturing output arrived at -0.4% MoM in January versus -0.1% expectations and 0% registered in December while total industrial output came in at -0.3% MoM vs. -0.2% expected and 0.3% last. On an annualized basis, the UK manufacturing production figures came in at -5.2% in January, missing expectations of -5.0%. Total industrial output plunged by 4.3% in the first month of the year against the -4.0% expected and the previous -4.0% reading.
The pound is certainly not out of the woods here but has some breathing room as we head into the weekend.