- Peter Dixon, an economist at Commerzbank AG
The cable was expected to perform an impressive rally on Friday, as GDP report was projected to show the economy is now the fastest growing economy among other G7 members. The report, however, was not able to surprise markets to the upside, hence, market reaction was muted. On the back of disappointing statistics from Germany, the cable slid to 1.6976, while the reaction on the U.K. GDP report was short-lived, with the pair first rising to 1.6992, however, a couple of minutes later the pair eased back to 1.6965.
The ONS said the economy grew 0.8% in the second quarter, following the same expansion three months ago. On a yearly basis, growth accelerated to 3.1%, also matching estimates. The main upside pressure came from a robust growth in the key services sector, which accounts for 78% of total economic output. Activity in the sector expanded 1%, posting the strongest growth since the third quarter of 2012. The GDP, however, still will be revised, as first estimate is based only on less than 50% of all the data and covers figures from only first two months of the second quarter. Keeping in mind that construction activity jumped 1% in June, while services and manufacturing gained 0.2% and 0.4% respectively, the upside revision of the economic output is widely expected.
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