The UK’s Office for National Statistics announced Britain’s quarterly gross domestic product (GDP) report on Tuesday. The data suggested the economy to have flatlined in the recent quarter. The UK was under severe Brexit driven pressure in 2019’s last quarter. PM Johnson’s victory in the general election on December 12th had finally released the pressure that saw signs of mild economic recovery at the start of the new year.
Tuesday’s data recorded the UK’s economic growth in the fourth quarter at 0.0%. The figure, however, came in line with what the analysts were expecting for Q4. In the third quarter, economic growth in the United Kingdom was posted at 0.4%.
Business Investment Slumped 1.0% In The Fourth Quarter Versus An Estimate Of A 0.5% Decline
In terms of annual growth, the UK’s economy registered 1.1% in 2019 that came higher than the analysts’ estimate of 0.8%, despite Brexit complications. Household spending was also announced to have improved in the past quarter on Tuesday. Business investment, on the other hand, slumped 1.0% in the fourth quarter that marked the sharpest decline since 2016. Analysts had estimated 0.5% decrease in Q4 business investment.
Following Johnson’s victory in the general election, however, companies were reported catching optimism as uncertainty started to fade away regarding the UK’s departure from the EU in January 2020. With modest signs of economic recovery starting to show up, the Bank of England had also decided in favor of keeping rates unchanged in its first policy meeting of the year in January.
Other data of economic importance for the UK on Tuesday included the release of the monthly manufacturing production report. The data highlighted manufacturing production in the UK to have improved by 0.3% in December versus the analysts’ estimate of a 0.5% increase at the end of 2019. In November, manufacturing production was recorded at a 1.6% decline.
GBP/USD Drops Below 1.29 On Tuesday Followed Be Its Recovery To 1.2960 Later In The Day
Construction output on Tuesday brought good news for the UK’s economy with an indication that the measure improved by 0.4% in December. Construction output in November was capped at 2.4% but the experts had anticipated it to decline by 0.4% in December amidst the rising Brexit complications.
UK’s industrial production increased by 0.1% in December after a much larger decline of 1.1% in November. Analysts, however, were expecting a greater 0.3% growth in industrial production in December.
The economic reports on Tuesday, however, wasn’t received well in the forex market with sterling reported to have lost traction after the release of the data. GBP/USD was seen trading as low as 1.2895 on Tuesday. After Fed Chairman Jerome Powell testified, however, the U.S dollar index started losing strength that pushed the currency pair back up to 1.2960.