Mixed U.K. data for April shows higher than expected GDP expansion
(Kitco News) - There was some U.K. data out this morning and it made for mixed reading. The figure which is usually the highlight was the GDP number for April. The report said UK gross domestic product (GDP) is estimated to have grown by 2.3% in April 2021, the fastest monthly growth since July 2020, as government restrictions affecting economic activity continued to ease. Now, much of this is old news and does not really compare to the more high-frequency data but it can give us some clues about what could happen to other nations as they come out of their respective lockdowns.
Reading deeper into the report, some of the issues facing manufacturing and production numbers could have been temporary. It was noted, within production, mining and quarrying output contracted sharply, by 15.0%, in April 2021 because of planned temporary closures for maintenance of oil field production sites. In addition to this, the construction sector contracted by 2.0% in April 2021 following a strong March, with new work slowing down faster than repair and maintenance.
U.K. GDP (MoM) 2.3% vs exp 2.2% prev 2.1% 2.1%
Manufacturing Production (MoM) (Apr) -0.3% vs exp 1.5% prev 2.1%
Industrial Production (MoM) (Apr) -1.3% vs exp 1.2% prev 1.8%
As the data is pretty delayed, there was no real material effect on GBP/USD which is rangebound at the moment. The price is stuck between 1.4251 and 1.4071 but more recently the resistance seems to be firm at the 1.42 area. The BoE is talking about tapering a lot recently and later in the session we are due to hear from BoE's Bailey and U.K. Chancellor Rishi Sunak. Both of these events could inspire some volatility so it would be wise to keep an eye out.