The latest data published by the Office for National Statistics (ONS) on Thursday showed that the UK economy grew in November, with GDP rising by 0.3% after a 0.1% decline in October.
Market expectations were for an increase of 0.1% in the same period.
Meanwhile, the Services Index (November) reached 0.2% for 3M/3M versus 0.1% for October (revised from 0%).
Other data from the UK showed that monthly manufacturing and industrial production jumped 1.1% and 2.1% respectively in November.
Market reaction to UK data
At press time, GBP/USD was up 0.03% on the day to trade at 1.3436.
The price of the British pound today
The table below shows the percentage change of the British Pound (GBP) against the major currencies listed today. The British pound was the strongest against the New Zealand dollar.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.08% | -0.03% | 0.00% | 0.11% | 0.03% | 0.14% | 0.07% | |
| euro | -0.08% | -0.11% | -0.09% | 0.03% | -0.05% | 0.06% | -0.01% | |
| GBP | 0.03% | 0.11% | 0.02% | 0.14% | 0.06% | 0.17% | 0.09% | |
| JPY | 0.00% | 0.09% | -0.02% | 0.10% | 0.03% | 0.11% | 0.07% | |
| Canadian | -0.11% | -0.03% | -0.14% | -0.10% | -0.07% | 0.03% | -0.05% | |
| Australian dollar | -0.03% | 0.05% | -0.06% | -0.03% | 0.07% | 0.11% | 0.03% | |
| New Zealand dollar | -0.14% | -0.06% | -0.17% | -0.11% | -0.03% | -0.11% | -0.08% | |
| Swiss franc | -0.07% | 0.01% | -0.09% | -0.07% | 0.05% | -0.03% | 0.08% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section below was published at 5:05 GMT on Thursday as a preview of the UK GDP and industrial data releases.
UK GDP, industrial production data overview
The United Kingdom (UK) docket contains GDP and industrial production data for November which will be released by the Office for National Statistics (ONS) on Thursday, later this session at 07:00 GMT.
UK GDP is expected to rise 0.1% month-on-month in November, reversing from a 0.1% decline in October.
UK industrial production may rise by 0.1% month-on-month in November, after a 1.1% increase in October. Meanwhile, annual production may fall by 0.4% in the same month, after a previous 0.8% decline.
How could UK GDP and industrial production data affect GBP/USD?
GBP/USD may halt losses if UK GDP and industrial production data meet expectations, shaping market views on the Bank of England’s policy outlook. Any downside surprises would increase selling pressure on the British pound against major currencies. Monthly manufacturing production will also be closely monitored.
The GBP/USD pair remains under pressure as the US dollar rose after stronger-than-expected US Producer Price Index (PPI) and retail sales data, coupled with a fall in the unemployment rate last week, reinforced expectations that the US Federal Reserve will keep interest rates unchanged in the coming months. Traders will also be watching the US weekly initial jobless claims data later in the day.
Technically, the GBP/USD pair is falling, trading around the 1.3420 level at the time of writing. The 14-day Relative Strength Momentum Index (RSI) is at 50 (neutral) after pulling back from overbought readings, indicating balanced momentum. Immediate resistance lies at the nine-day moving average at 1.3444. A daily close above the short-term average could open the way towards a three-month high at 1.3562. Key support is located at the 50-day EMA at 1.3387. A daily close below the mid-term average will open the doors for the pair to move into the area around the eight-month low at 1.3010.
Frequently asked questions about GDP
A country’s GDP measures the growth rate of its economy over a certain period of time, usually a quarter. The most reliable numbers are those that compare GDP with the previous quarter, for example the second quarter of 2023 versus the first quarter of 2023, or with the same period the previous year, for example, the second quarter of 2023 versus the second quarter of 2022. Annual quarterly GDP numbers extrapolate the quarter’s growth rate as if it were constant for the rest of the year. This can be misleading, however, if temporary shocks affect growth in one quarter but are unlikely to persist throughout the year – as happened in the first quarter of 2020 when the Covid pandemic struck, when growth declined.
A high GDP result is generally considered positive for a country’s currency because it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attract higher foreign investment. In the same vein, when GDP falls, it is usually negative for the currency. When the economy grows, people tend to spend more, which leads to inflation. The country’s central bank must then raise interest rates to combat inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency rise.
When the economy grows and GDP rises, people tend to spend more which leads to inflation. The country’s central bank must then raise interest rates to combat inflation. High interest rates are negative for gold because they increase the opportunity cost of holding gold versus putting money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for the gold price.
