Despite the fact that the UK GDP increased by 0.5 percent in May (compared to estimates of 0.0 percent), and industrial production increased by 1.4 percent in June, the GBP/USD remains under pressure (estimates – 0.3 percent ).
Hawkish UK data
Today’s hawkish data from the UK economy has been particularly interesting. Given the expectations, both industrial production and gross domestic product (GDP) have grown surprisingly quickly.
Let’s look at the numbers because the UK GDP number was intriguing, with the most recent data showing upward revisions in many sectors. However, the Office of National Statistics claims that growth was fueled by brisk holiday bookings, which is ironic given that British Airways and Heathrow have both announced that they will not accept any more bookings over the summer.
There has also been a significant increase in GP appointments, which appears to contribute to the GDP figure. As the COVID vaccination program comes to an end, people are visiting their doctors more frequently and, presumably, purchasing more products over the counter as a result.
Now, this half-percentage-point increase compares favorably to March estimates, a 0.1-percentage-point increase in March, and a negative 0.2-percentage-point increase in April. Industrial production increased by 1.4 percent year on year in May. The consensus was for a 0.3 percent drop.
I’d like to show you a couple of charts.
This is the value of sterling in relation to the euro. In a moment, I’ll take a look at the bigger picture. These are 30-minute candles, and you can clearly see the point at which the GDP number and the industrial action figure were released. As of the time of recording, we have seen a pullback.
We’ll have industrial production across the eurozone in a matter of weeks, but that’s unlikely to change the current trend, which is upward. This is also visible on the single daily candle chart shown here. However, we are well off the highs of today at 11854, and sterling has recovered at the expense of the eurozone’s currency, which is currently in all sorts of trouble.