UK economy grew more than expected in second quarter

The UK’s gross domestic product (GDP) grew 4.8% in the second quarter. This is higher than the increase seen in Germany, France or the United States. Pound Sterling is not reacting.

One of the main economic events of this week was the release of UK GDP. There are two versions of quarterly GDP in the UK – preliminary and final. They are published with a difference of 45 days, but preliminary data is always more relevant to the financial markets, because being the oldest, it has a greater impact.

In the second quarter of the year, the UK economy grew faster than its peers. GDP grew by 4.8%, which is in line with expectations, but much stronger than the GDP of, for example, the United States or Germany.

The easing of restrictions related to the coronavirus has helped. The main contribution to GDP growth was made by housing and food services activities as well as wholesale and retail sales.

Production in the construction sector also increased in the quarter, as did production. Only the initial commercial investment fell, which somewhat spoiled this extremely good data.

the pound has fallen this week

Despite strong economic growth, the pound fell this week. The 4-hours chart below shows that the GBP/USD pair is in a downtrend as represented by a series of lows and lower highs.

However, you might think that this is just a consolidation of a bullish flag pattern. If so, the bulls can wait for the pair to close above 1.39 before buying.

Overall, the pound sterling declined on the back of GDP performance. This tells us that holiday mode and summer business conditions are more important in August than economic data.

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About the Author: Forrest Morton

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