The market can often be full of surprises, and the UK GDP released today proved just that. GDP for the quarter showed a surprise increase coming in at 0.4% compared to the expectation of 0.3%.
UK economy so far in 2017 has shown slow and steady growth with the first two quarters growing by 0.3%.
This surprise figure will now fuel further anticipation of a potential rate hike by the Bank of England who will be meeting on Thursday November 2nd to discuss and decide if they will be raising the official bank rate.
With inflation in the UK at 3%, 1% above the official Government target there have been calls for the BOE to take action and raise rates but both Bank of England Governor Mark Carney and other members of the Monetary Policy Committee have stressed their concern that the UK economy might not be able to handle a rise in interest rates. However, with the latest GDP figure beating expectations maybe there are signs that the UK economy may be ready to face interest rates again at 0.50%.
The market reacted with sterling bulls rushing in with the GBP/USD at the time of writing trading at 1.3249 versus the 1.3123 level it was trading at prior the data release. EUR/GBP at the time of writing is trading at 0.8890 and the UK FTSE 100 at 7514.50.
