Today was a big day for British pound traders as key economic data was released. All of it surprised to the upside, an important development given expectations that the Bank of England will raise the bank rate by 50bp later this week.
Perhaps the most surprising was the UK GDP for October. The data showed that the UK economy has grown by 0.5%, more than the 0.4% expected.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
The services sector was the main contributor to the GDP growth in October – good news considering that it follows a fall of 0.8% in September.
Besides the better-than-expected economic growth, here is more positive economic data released today in the United Kingdom:
- Construction output m/m: 0.8% vs. 0.1% expected
- Industrial production m/m: 0.0% vs. -0.1% expected
- Manufacturing production m/m: 0.7% vs. -0.1% expected
How did the pound react to the positive economic data?
The British pound, just like other major currencies, has traded in tight ranges recently for several reasons. First, it is that time of the year when traders and investors prefer not to take chances. December is a holiday month and so trading is light as liquidity is not there.
Second, December marks the end of the trading year. For many, the risk of ruining the year’s performance is too big to take during a month known for its tight ranges.
Finally, the focus this week is on the four central banks set to announce their monetary policy decisions. Among them is the Bank of England on Thursday.
Therefore, it is not the best time of the week to take a position in any GBP pair. Also, it is not the best month to trade, given the poor liquidity out there.
Source: https://invezz.com/news/2022/12/12/should-you-buy-the-british-pound-amid-todays-positive-economic-data/