In a surprise reading, the final fourth quarter GDP adjustment in the UK accelerated 0.60% above the previous 0.50%. On an annualized basis, GDP increased to 2.10% over the recently-measured 1.90%. A services sector which rose at the fastest pace of 0.80% compared to the previous estimates was largely responsible for the gap upward. While construction also helped to contribute to stronger growth, industrial production remained weak, falling 0.40%. Overall, the third revision to the UK's GDP shows that the economy ended modestly stronger than expected but also showed that household income continued to fall. While the data may be encouraging, uncertainty over a Brexit remains a big factor.
Simultaneously, UK's trade balance data showed that the country's current account deficit expanded in the fourth quarter of 2015 and was the biggest ever deficit recorded by the ONS. A surge in the deficit of 7.0% in the fourth quarter, up from 4.0% previously spurred the ONS to comment that the biggest impact on the current account balance was from falling direct investment and lower returns from foreign investment in sectors such as mining and quarrying, reflecting troubles in global markets. The British Pound however shrugged off the mixed data and managed to edge higher after the reports were released. GBPUSD fell to session lows near $1.433 ahead of the report and is currently up 0.10% trading at $1.439. However, prices are likely to remain pressured to the downside.
UK Q4 GDP Accelerates
Andamento del mercato - 31/03/2016