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Pound Rose Even as the Final GDP Revised Down

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Dec. 24 2015, Updated 9:25 a.m. ET

Pound rose by 0.33%

The pound-US dollar pair was trading on a positive bias on December 23, 2015. The currency pair found resistance at 1.49. It rose to a high of 1.4904 before closing the day at 1.4874. The day marked an end to a near ten-day downward spiral in the currency. The downward spiral started on December 11 when the pair was close to 1.5217.

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Domestic data release on a slightly negative note

The Office for National Statistics published the final GDP (gross domestic product) and balance of payments data for the third quarter on December 23, 2015. The final GDP for the third quarter rose by 0.4%. This was 0.1% below the previous estimates. The real household disposable income rose by 0.5%. There wasn’t a revision to the current account balance. It was -17.5 billion pounds. The trade deficit widened to 8.7 billion pounds in the third quarter. This was primarily due to the rise of trade in the good deficit. It was partially offset by the trade in services surplus. The report also suggested a marked fall in direct investment and portfolio investment payments. This resulted in the primary income deficit falling to 3.3 billion.

Impact on the market

The iShares MSCI United Kingdom ETF (EWU) reacted positively to the data release. It ended 2.6% higher on December 23, 2015. The First Trust United Kingdom AlphaDEX ETF (FKU) followed a similar trend. It rose by 1.5%.

British ADRs (American depositary receipts) also came in negative on December 23. Unilever (UL) rose by 2.1%. Carnival (CUK) fell slightly by 0.35%, respectively. On the same day, banking ADRs were trading on a positive note. HSBC Holdings (HSBC) rose by 1.9%. Barclays (BCS) rose by 1.6%.

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