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UK GDP Hints On Soft Brexit Which Supports Pound

May 4, 2017
By Anatol Thomas
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During the European trading hours, the UK GDP figures played a major role in the economic calendar. The output is expected to gain just 0.4%, which is the slowest growth in the past 3 months. The GDP is expected to reach 2.2% compared to 1.9% in the previous year. The average trend range on-year growth is expected to be steady. The economic condition could have been worse, but at the same time, the data is not exciting for the investors.

The forecast for the economic news released in February was much higher than the current economic data. Analysts have been pushing the growth factor beyond reachable limits. This further adds to the disappointment in the market. However, strangely, the data helped British Pound to shoot up higher.

The Bank of England (BOE) has commented that it won’t change its outlook on the dovish policy. Despite the GDP data, the baseline policy won’t be affected anytime soon. The outlook of BOE indicates that the UK is gearing up for a soft Brexit. The government of Theresa May is forced to take a softer approach to Brexit. The EU leaders may not offer a great protest in negotiating deals because the June election mandates may backfire. The investors may have some peace after EU softens its approach towards the soft Brexit.

The US GDP report is not exciting for the investors as well. In the past six weeks, the economic data has not improved greatly and this may ease the Fed rate hike bets. This could hurt the US dollar further helping Pound as a consequence.