Hopes of the economy recovering in the second quarter were raised today as official figures showed first quarter gross domestic product (GDP) had been raised up for quarter one.
The pound jumped on Friday morning and is now $1.30747 against the dollar as the Office for National Statistics (ONS) said GDP grew by 0.2 per cent at the start of the year on a quarterly basis, 0.1 percentage points higher than previous estimates.
For the year, GDP stayed flat, as it grew 1.2 per cent.
Read more: US dollar holds steady after Trump-Kim meeting as pound weakens
Services output in particular gained momentum, going up by 0.3 per cent in April, representing its highest growth since November 2017.
It follows the Beast from the East hitting British shores in March, while consumers are also being squeezed due to inflation caused by a weak pound.
Bank of England economists reckon GDP will increase in the three months to the end of June, going up by 0.4 per cent on a quarterly basis.
David Cheetham, chief market analyst at XTB said the results "sowed the seeds" for the pound's recovery after it hit a seven month low against the dollar yesterday.
"The pound fell roughly 10 per cent in a little over two months since its April peak largely due to the Bank of England backing down on a May rate hike, and there is some suggestion that the depreciation was a bit of an overreaction," he explained.
"While Brexit remains a major potential source of uncertainty there has been mildly positive developments on that front in the ensuing period since the pound peaked, with the government just about managing to hold things together."
Head of GDP at the ONS Rob Kent-Smith said:
GDP growth was revised up slightly in the first three months of 2018, with later construction data and significantly improved methods for measuring the sector, nudging up growth.
These improved methods, introduced as part of ONS's annual update to its figures will lead to better early estimates of the construction sector with smaller revisions in the future.
Read more: A rising dollar is positive for US small capitalisation shares
[contf]
[contfnew]
CityAM
[contfnewc]
[contfnewc]
