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British Pound Rises Despite the Contraction of British Economy

2019-10-10 09:36 am | Resource: News | No Views : 51

 The British Pound Rises Despite the Contraction of the British Economy

Sterling traded higher against most of the major currencies after data from the UK showed a decline in GDP, a decline in industrial production and shrinking trade deficit.

The UK economy contracted by 0.1% in August

The UK's Office for National Statistics said on Thursday that growth in gross domestic product (GDP) became negative in August. The economy fell 0.1% and was below zero for the first time since April. However, the upward revision came to 0.4% for expansion in July.

Also, the 3-month continuous growth of 0.3% was strong, surprising the upside. It improved by 0.2 percentage points from the previous month after GDP contracted by 0.2% in the quarter to June.

The data showed that manufacturing was delayed in the three-month period covered by the report while television and film production were in the lead. The production index fell 0.4% but the negative contribution to the total was only six basis points due to the size of the sector. Construction advanced 0.1%, with a marginal impact, while the non-manufacturing sector jumped 0.4%, and constitutes 36 basis points in the overall expansion.
British annual growth slowed to 1.1% from 1.3%.

UK industrial production fell 0.6% in August

The Office for National Statistics said on Thursday that UK industrial production fell 0.6% month-on-month in August and 0.4% in the three months to August, driven by a decline in manufacturing.
  • Year-on-year decline in the three-month period was 1.3%.

Besides manufacturing, the electricity, gas, mining and quarrying sector was the biggest contributor to the monthly decline, losing 0.7% and 1% respectively, as well as pharmaceutical products which shrank by 4.7%.

The UK's trade deficit shrinks to 4.6 billion pounds

The UK's overall trade deficit fell by 13.0 billion pounds in the three months to August to 4.6 billion pounds, the Office for National Statistics said in a report released on Thursday. Imports of goods were the main cause of the decline, falling by £ 9.2 billion to £ 118.8 billion in the June-August period.

The service trade surplus was £ 23.8 billion in the same period, up £ 0.5 billion.

When adjusting for inflation, the deficit was £ 4.3 billion. On a yearly basis, the total trade deficit increased by £ 18.6 billion to £ 50.4 billion in the 12 months ending August 2019.

Pound Trading
  • The pound rose to 1.2236 levels against the dollar, up 0.17%. .
  • GBP / JPY was up 0.20% at 131.44 against the yen.
  • The pound was down 0.07% at 1.2145 against the franc. .
  • The British currency was down 0.17% at EUR / GBP at 0.90050.

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