- Neil Prothero, deputy chief economist at EEF
British economy is on the mend; however, it has lost some the momentum in the beginning of 2014, therefore, markets were not expecting any surprises on Friday from the final GDP figures. Nevertheless, there were some chances that current account deficit will narrow more than expected, suggesting the recovery is broadening and economy is rebalancing.
The expectations were still low, therefore, a 22.4 billion pounds current account deficit for the final quarter pushed the cable only slightly below 1.66. While this is a better figure from previous month's reading, it is only marginally lower than third quarter's all-time high. What is more important is the fact exports fell by 0.4 billion pounds.
Separately, the ONS said the nation's fourth quarter's GDP was unrevised at 0.7%, mostly driven by services output, consumer spending and trade sector. On a yearly basis the economy posted a 2.7% growth, unchanged from the previous estimate, however faster than the 1.9% expansion recorded in the third quarter. The economy still remains around 1.4% below its pre-crisis peak that was reached at the beginning of 2008. The BCC already said that growth remains on course, that is why the cable continued its appreciation even despite disappointing data.
© Dukascopy Bank SA