The United Kingdom reported data indicating that the gross domestic product matched analyst expectations of .7 percent, down from .8 percent in the previous quarter. The annualized growth of the United Kingdom came in at 1.9 percent, which was greatly improved from .3 percent in 2012.
The positive data fueled speculation of a pending benchmark rate increase by the Bank of England (BoE) when coupled by the falling unemployment rate. Blerina Uruci, an economist at Barclays PLC, said “we forecast the Bank will start hiking in Q2 2015, given the strong turnaround in the economy and labour market.” Uruci noted that the BoE risks growth expansion if rates are increased too soon.
Chancellor George Osborn has positive things to say following the data. “Growth is broadly based, with manufacturing growing fastest of all,” he said.
The Sterling fell from its highs, and it is likely traders took some off the table given the pound’s 9.3 percent rise year-over-year. Yesterday’s 4H chart featured a Fibonacci fan, which proved moderately successful. The second prong is still holding as support, but the pound sold-off through it on the news but did bounce on 1.6545. The current candle is testing the second prong, and this could be a deciding factor in the direction of GBPUSD.