- Pound sterling rises further to better than expected fourth-quarter GDP growth
- EUR holding its own vs GBP while being near four-month lows against USD
The British pound is up against the euro on Tuesday afternoon in response to figures showing faster than expected UK GDP growth in the final quarter of 2019. Gains were limited as markets awaited speeches from Mark Carney, Governor of the Bank of England and ECB President Christine Lagarde.
GBP/EUR was higher by 16 pips (+0.14%) at 1.1803 with a daily price range of 1.1822 to 1.1861 as of 1pm GMT. Price action was rangebound with a floor at 0.843 and the ceiling at 0.845 by the afternoon in London. The gains add slightly to the week’s tally of +0.58%.
Pound to Euro: Pound sterling rises further to better than expected fourth-quarter GDP growth
GBP rose in response to the better than expected fourth-quarter GDP growth thanks to surprise growth in December. Economists had been expecting a -0.3% decline with the belief that the general election and resulting political uncertainty would have curtailed consumer spending, holding back growth. In fact the economy rose +0.3% m/m in December. That led to 1.1% GDP growth year-over-year, down slightly from the 1.2% in the third quarter but much better than the 0.8% expected.
Survey data has already been pointing to a rebound in post-election activity and so sentiment surrounding the UK economy should be boosted even further knowing that the slowdown in the fourth quarter was not as deeps as some had feared. Other data released on Tuesday included industrial production and business investment which was more of a mixed bag.
Pound sterling has been making a recovery from the sharp sell-off last week brought about by concerns about trade friction in the future trading relations between the EU and UK. Today the Bank of England’s Cunliffe said it was “conceivable that global markets in London shift to EU but not likely.”
Later today outgoing Bank of England Governor Mark Carney will be making some remarks.
EUR holding its own vs GBP while being near four-month lows against USD
Christine Lagarde is scheduled to speak at the European Parliament for the first time since becoming ECB President roughly 100 days ago. While holding its own against the pound, the euro is near four-month lows against the dollar.
