After weakening to a one-month low against the US Dollar and falling away from a 22-month high against the Euro on Thursday the Pound will be relying on the latest UK Gross Domestic Product data to offer support in Friday’s session.
Economists are widely forecasting that the UK economy expanded by 0.8% on a quarterly basis and by 3.1% on a year on year basis.
Some are warning however that those figures could be softer than expected due to softer manufacturing data released earlier in the month and as Thursday’s retail sales data disappointed.
According to the UK’s Office for National Statistics on a year-over-year basis, retail sales rose 3.6% in June, below expectations for a 3.9% gain, after rising at an annual rate of 3.7% in May.
In the three months to June, retail sales rose 4.5% year-over-year. It was the fastest quarterly increase in 10 years, indicating that the U.K.’s consumer driven recovery is continuing.
The softer data dented expectations for a better-than-forecast UK GDP report and caused investors to embark on a round of profit taking. Investors also paired their bets for an interest rate hike by the end of the year.
The GBP/USD exchange rate retreated after data showed that the number of Americans filing for unemployment benefits declined last week to its lowest level in more than eight years.
According to the Washington based Labour Department the number of claimants dropped by 19,000 to 284,000.
The figure was better than economist forecasts.
The Euro recovered ground after PMI data for the wider 18-member Eurozone came in above expectations and suggested that the region’s economic recovery has resumed.
The GBP/EUR dropped below the 1.26 level.
The single currency could make further gains on Friday if the latest IFO data for Germany comes in strongly.
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