Pound Extends Rise On Strong U.K. GDP Data
July 28 2015 - 5:45AM
RTTF2
The British pound continued to be strong against the other major
currencies in the early European session on Tuesday, after data
showed that U.K. economy expanded at a faster pace in the second
quarter largely driven by an improvement in services output.
Data from the Office for National Statistics showed that U.K.
gross domestic product grew 0.7 percent sequentially, in line with
forecast, following a 0.4 percent rise in the first quarter.
Services expanded 0.7 percent and production increased 1 percent.
While construction growth showed flat growth, agriculture
contracted 0.7 percent.
GDP was 2.6 percent higher in the second quarter compared with
the same quarter a year ago. Annual figure also matched
expectations.
Another report from ONS said the latest index of services
suggested that output increased by 0.3 percent in May from April,
when it climbed 0.2 percent. The monthly growth rate came in line
with expectations. On a yearly basis, services output advanced 2.7
percent.
The focus also remains on the two-day U.S. Federal Reserve
meeting that begins later in the day. Analysts do not expect the
Fed to raise interest rates before September but traders will be
scrutinizing the statement for any hints about the timing of the
first rate hike.
Meanwhile, the European stocks traded higher, lifted by company
earnings results and M&A activities. The investors watch the
Chinese stocks, as the stock market turmoil in China caused ripple
effects across global equity and commodity markets on Monday.
Chinese shares wavered between gains and losses today as
authorities scrambled once again to stave off a full-blown market
collapse.
The People's Bank of China said on Tuesday it would inject 50
billion yuan ($8.05 billion) into the money markets via open-market
operations in its biggest liquidity injection since July 7. The
central bank also hinted at further monetary easing using "various
monetary tools" to help ease fears about the impact of stock market
volatility on the broader economy.
The currency traded higher in the Asian trading.
In the early European trading now, the pound rose to a 6-day
high of 1.5032 against the Swiss franc and a 5-day high of 192.59
against the yen, from early lows of 1.4946 and 191.44,
respectively. If the pound extends its uptrend, it is likely to
find resistance around 1.52 against the franc and 194.50 against
the yen.
Against the U.S. dollar and the euro, the pound advanced to
1.5586 and 0.7096 from early lows of 1.5527 and 0.7129,
respectively. The pound may test resistance around 1.56 against the
greenback and 0.69 against the euro.
Looking ahead, Canada industrial product and raw materials price
indices for June and U.S. S&P/Case-Shiller home price index for
May, Markit's preliminary U.S. service sector PMI report for July
and U.S. consumer confidence for July are slated for release in the
New York session.
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