Pound Mixed After U.K. GDP Data
August 12 2020 - 3:07AM
RTTF2
The pound came in mixed against its major trading partners in
the European session on Wednesday, after a data showed that the U.K
economy shrank less than forecast in the second quarter, as the
government eased restrictions to tackle Covid-19.
While the currency rose against the yen and the greenback, it
was lower against the euro and the franc.
Data from the Office for National Statistics showed that the UK
economy contracted for the second straight time in the second
quarter, but there was some pick up in June.
GDP plunged 21.7 percent on an annual basis in the second
quarter, smaller than the economists' forecast of 22.4 percent.
In June, GDP growth accelerated to 8.7 percent from 2.4 percent
in May.
Gross domestic product contracted by 20.4 percent sequentially
in the second quarter, following a 2.2 percent drop in the first
quarter. Economists had forecast a quarterly fall of 20.5
percent.
Nonetheless, the latest fall was the biggest contraction since
the records began in 1955.
The pound spiked up to more than a 2-month high of 139.53
against the yen, after falling to 138.88 at 10:15 pm ET. The pound
is seen finding resistance around the 141.00 mark.
The pound reversed from an early 5-day low of 1.3017 against the
greenback, rising to 1.3068. Should the pound rises further, 1.34
is possibly seen as its next resistance level.
The U.K. currency dropped to a 2-day low of 0.9024 against the
euro, down from a high of 0.8985 seen at 5:00 pm ET. The pound is
likely to challenge support around the 0.92 level.
Data from Eurostat showed that Eurozone industrial production
grew for the second straight month in June, following a marked
relaxation of the coronavirus containment measures.
Industrial output grew 9.1 percent on month, slower than the
12.3 percent rise in May and the 10 percent rise economists' had
forecast.
The GBP/CHF pair hit a 2-day low of 1.1916, after rising to
1.1998 in pre-European deals, which was its biggest level since
August 4. The next possible support for the pound is seen around
the 1.18 level.
Looking ahead, U.S. CPI and monthly budget statement for July
are scheduled for release in the New York session.
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