The figure is the UK’s strongest growth figure in five years with the number being boosted by the Olympic Games ticket sales. The ticket sales are thought to have contributed up to 0.2%. The service sector which makes up about three quarters of the country’s GDP shot up by 1.3% in the third quarter. Production rose by 1.1%, its highest climb in more than two years and Manufacturing by 1%. The construction sector continued to be down with output falling by 2.5% its third straight quarterly decline.
As a result of the good news the Pound surged through the 1.61 mark against the US Dollar and strengthened by 0.22% against the Euro.
Adam Solomon, head trader at TorFx said; “The 0.6% forecast was initially considered largely optimistic and there was a real possibility that a disappointing figure would weaken the Pound and revive speculation that the Bank of England will resume quantitative easing in November.’
‘However, the report showed that manufacturing grew 1.1%, services expanded 1.3% and construction fell by 2.5%. All in all, the UK economy grew a full 1% during the third quarter, which supports Charles Bean statement earlier this morning where the Deputy Governor of Bank of England said that the economy is ‘past its worst’. The Pound has reacted very positively to the news and the UK currency may gain some upward momentum now with speculation of further QE next month diminishing.”
Today’s figures will give the British government a sigh of relief in a week that has seen the coalition receive a lot of bad press, and will lend weight to Prime Minister David Cameron’s stance that his government’s plan to reduce the nation’s budget deficit is working.
“There is still a long way to go, but these figures show we are on the right track,” Chancellor of the Exchequer George Osborne said in a statement. “The economy is healing and we have the right approach.”
Britain is the first of the G7 nations to release its GDP data for the third quarter. The US figures are due to be released tomorrow with the other G7 member’s data following next week. The data releases will give traders a clearer picture of the state of the global economy. Fingers crossed that it is heading in the right direction.
The Pound to Euro exchange rate is currently trading at 1.2397
The Pound to US Dollar exchange rate is currently trading at 1.6138
The Pound to Australian Dollar exchange rate is currently trading at 1.5528
The Pound to New Zealand Dollar exchange rate is currently trading at 1.9585
The Pound to Canadian Dollar exchange rate is currently trading at 1.5994
The Pound to Japanese Yen exchange rate is currently trading at 129.3100
The Euro to US Dollar exchange rate is currently trading at 1.3016
The Euro to Pound exchange rate is currently trading at 0.8066
The Euro to Australian Dollar exchange rate is currently trading at 1.2526
The Euro to New Zealand Dollar exchange rate is currently trading at 1.5801
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