The British pound extended gains for the fourth day on Friday and is on track for its biggest weekly gain in over four months, as UK’s optimistic economy helped bolster the currency.
The sterling gained 0.4 percent to 1.4198 against the dollar, following the data release. It has climbed 5.5 percent against the greenback this year.
Analyst Neil Jones said that the general weaker dollar idea remains and in play. Jones added that gross domestic product (GDP) figures are also boosting the pair further.
A lower dollar and hopes of UK government favoring a soft Brexit mainly contributed to the pound’s strength this month as well.
The currency was up 0.2 percent to 1.1435 against the euro. It also added 0.5 percent to 155.51 against the yen.
Sterling raised 0.01 percent to 1.3309 against the Swiss franc. The pound traded 0.1 percent higher to 1.7525 against the Canadian dollar as well.
Currency analyst Lee Hardman stated that the optimistic pound further supports its recent bullish momentum. He added that it further proves that the country’s economy continues to perform better than expected, following the Brexit referendum.
Hardman also expects a pull back, especially when talks with the European Union regarding a trade deal restarted. Nonetheless, he said the bigger picture is still supportive for the sterling.
Analysts also said to chase the currency higher, seeing its long positioning near to multi-year extremes.
UK Economy Grows, But was Still Slower and Uneven
Britain’s economy expanded better than analysts’ expectations in the fourth quarter of 2017, but still grew in a sluggish and uneven manner, as Brexit still pressures the economy.
UK’s official statistics provider the Office for National Statistics (ONS) reported a 0.5 percent GDP expansion in the three months ending December.
This surpasses analysts forecast of 0.4 percent. It also marks as the country’s fastest quarterly growth rate in the previous year.
Manufacturing sector also strengthened, but construction fell 1 percent. This is its third straight decline and weakest quarterly performance since the third quarter of 2012.
Still, ONS’ GDP head Darren Morgan stated that the underlying picture is of slower and uneven growth across the economy.
Even though GDP rose to 1.8 percent year-on-year, it was still lower than 2016’s 1.9 percent pace. Annual expansion has not been slower since 2012, when the economy grew 1.5 percent.
UK’s economic expansion has slowed down through the impact of the Brexit vote. This is partly due to the pound’s weakness, which has resulted to higher prices that tightened consumer spending. Business uncertainty also partially affected the country’s growth.
The International Monetary Fund (IMF) expects Britain’s expansion to slow to 1.5 percent this year.