Pound Strengthens As UK GDP Data Beats Estimates
The pound (GBP) attracted buying interest against other currencies in European trading hours on Thursday (05/15) after the release of the United Kingdom (UK) Gross Domestic Product (GDP) data. The Office for National Statistics (ONS) reported that the economy grew at a strong pace of 0.7% in the January-March period, compared to estimates of 0.6%. The economy barely expanded in the final quarter of 2024.
Year-on-year, preliminary UK GDP growth came in at 1.3% in the first quarter, slightly higher than expectations of 1.2% but slower than the previous release of 1.5%. In March, the UK economy grew by 0.2%, while economists had anticipated a flat performance after growth of 0.5% in February.
Higher UK GDP growth reflects strong economic health, which reduces expectations of an interest rate cut by the Bank of England (BoE) and bodes well for the pound. On Wednesday, BoE Monetary Policy Committee (MPC) member Catherine Mann commented in an interview with CNBC that monetary policy should be maintained at current levels due to upside risks to inflation and solid labor market conditions, Reuters reported.
Mann stated that the labor market is strong despite employment data for the three months ending in March showing slower job growth on Tuesday. "The first observation is that the labor market is more resilient. Now, yes, we have some results that show a slowing labor market, but that is not a non-linear adjustment," Mann said.
Meanwhile, UK Manufacturing and Industrial Production data for March were weaker than expected. Month-on-month Manufacturing and Industrial Production data fell by 0.8% and 0.7% respectively, while both were expected to contract by 0.5%.
Source: FXStreet
