The UK economy grew more than expected in the Q2, despite the country's decision to leave the European Union, official data showed on Friday. According to the Office for National Statistics (ONS), the UK GDP advanced 0.6% during the reported period, compared to the preceding quarter's 0.5% rise. On an annual basis, GDP expanded 2.2% in the Q2 of 2016. Both reading came in line with analysts' expectations. The data also showed that services and production jumped 0.5% and 2.1%, respectively in the Q2. In Contrast, construction dropped 0.4%, whereas agriculture fell 1.0%. Furthermore, household consumption increased 0.9% over the Q2, rising for 6 consecutive quarters. Year-over-year, household consumption climbed 3.0% in the reported quarter. Government spending declined 0.2% on a quarterly basis, but increased 0.8% on a yearly basis. Investment was the largest component of Britain's GDP in the Q2, growing 1.4% quarter-over-quarter and 0.9% year-over-year.
Despite promising UK retail sales figures and the lowest unemployment rate since June 2008, the Brexit vote negatively affected business and consumer confidence, as the manufacturing activity gauge fell to the lowest level since 2013 and the services activity dropped to its lowest level since 2009.
All focus on US data
GBP/USD to remain above 1.31 today
The GBP/USD currency pair retreated from its intraday gains on Friday and ended the day with a 53-pip loss, amid Fed Yellen's statement that there might be two rate hikes by year's end. However, despite this decline the Cable is expected to edge higher, as technical studies in the daily timeframe suggest. On the other hand, the weekly and the monthly PPs form a strong resistance area around 1.3160, that could prevent the pair from posting gains of more than 30 pips. Due to lack of impetus, a 30-pip rally might be all that the Sterling could squeeze out today, which would still support the positive outlook.
Daily chart
Hourly chart
Still no consensus
There are 56% of traders with a negative outlook towards the Cable today, compared to 58% on Friday. Meanwhile, the share of purchase orders remains basically unchanged, as it dropped from 58 to 55%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 50% of positions are long and 50% are short. The sentiment at Saxo Bank is now bearish, as the numbers of longs and shorts each take up 46% and 54% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Slightly more than half of traders (52%) believe the British currency is to cost 1.30 or more dollars after a three-month period. The most popular price interval, however, was divided between three price intervals, namely the 1.26-1.28, 1.36-1.38 and 1.38-1.40, each selected by 13% of the voters. The second most popular choices imply that the Sterling is to cost either between 1.24 and 1.26 dollars, or between 1.34 and 1.36 dollars in three months, both chosen by 11% of the surveyed. At the same time, the mean forecast for Nov 29 is 1.3108.