"The further improvement in many of the timely business surveys suggests that the economy will continue to grow strongly in the fourth quarter"
- Samuel Tombs, an economist at Capital Economics Ltd.
The Pound soared against the U.S. Dollar on Wednesday after the data from ONS showed the economy expanded as expected in the initial estimate. The cable advanced 0.35% to 1.6270, while versus the single currency the Sterling gained 0.05% and hit 0.8365.
As it was widely expected the U.K. economy posted stronger third quarter growth, when compared with the previous three months, with both the annual and quarterly headline figures remained unrevised. Britain's GDP grew at a rate of 0.8% between the second and third quarter, and posted a 1.5% annual growth. Business investment moved higher 1.4%, while shipments plunged 2.4%, with net trade knocking 0.9% from overall GDP. While domestic factors contributed to growth, with consumer spending rising 0.8% and government spending increasing 0.5%, the growth was primarily driven by stronger demand from the Eurozone. A pickup in business investment helped to lift gross fixed capital formation by 1.4% over the corresponding period, adding 1.1% to GDP.
Despite welcoming signs, the economy is still 2.5% smaller than before the crisis. The central bank pledged to support the economy by keeping borrowing costs at record-low until the unemployment hits at least 7%. According to the latest OECD forecasts, monetary policy is likely to start normalizing in the last quarter of 2015.
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