As European markets opened Sterling adopted a bullish stance.
The British asset was within touching distance of a two-and-a-half year high against the US Dollar and was trading higher against the Euro on the expectation that a UK growth report would confirm that the nation enjoyed its most significant growth in 2013 since the onset of the global economic crisis.
Although the Pound softened last week after Bank of England Governor Mark Carney asserted that interest rates would be held at record lows for the foreseeable future, the currency almost reversed declines against the Euro before the GDP figures were released.
Economists expected the report to show that the UK economy expanded by 0.7 per cent in the fourth quarter following growth of 0.8 per cent in the third.
The data confirmed expectations, making 2013 the UK’s best year since 2007.
Every sector but construction enjoyed growth.
The figures prompted this response from Chancellor of the Exchequer George Osborne; ‘It is more evidence that our long-term economic plan is working. But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that’s delivering jobs and a brighter economic future.’
Sterling consolidated gains after the data was released.
The Pound was also supported as the Confederation of British Industry asserted that Britain’s economic output expanded at its most rapid pace in January since September 2007.
According to the CBI their indicator of output growth balance advanced from 26 to 30 in the three months to January, a sign that the UK economy continued to strengthen in the New Year.
CBI policy director Katja Hall stated; ‘A picture is unfolding of a real upsurge in output across much of the UK economy. We certainly need companies investing more and creating a bigger footprint in fast-growing markets, and while some risks remain, we expect the economy to continue to strengthen through 2014.’
Meanwhile, the UK index of services gained by 0.8 per cent in the three months to November vs. expectations for a 0.7 per cent gain, and rose 0.4 per cent on the month from October rather than increasing by 0.3 per cent as forecast.
Although US consumer confidence figures could inspire currency market movement over the next few hours, investors will be looking to the next piece of influential UK news – Thursday’s mortgage approvals report.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6590 ,
Pound Sterling,,Euro,1.2143,
Pound Sterling,,Australian Dollar,1.8829,
Pound Sterling,,New Zealand Dollar,2.0045 ,
US Dollar,,Pound Sterling,0.6023,
Euro,,Pound Sterling,0.8235,
Australian Dollar,,Pound Sterling,0.5297 ,
New Zealand Dollar,,Pound Sterling,0.4988,
[/table]
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