Pound posts strong gains
The pound to US dollar currency pair was on a positive trajectory on January 28, 2016. The currency pair posted gains close to 0.88% for the day. The GDP (gross domestic product) coming out on a decent note was one of the primary reasons for the rise.
The currency pair had risen to a high of 1.4 before ending the day at 1.4. With no major data release from the United Kingdom scheduled for this week, the currency is expected to wait for the manufacturing PMI (Purchasing Managers’ Index) release scheduled for February 1, 2016, for further direction.
British preliminary GDP meets market expectations
The Office for National Statistics published the UK preliminary fourth-quarter GDP on January 28, 2016. The report suggested a rise of 0.5%, which was in line with the forecasts. The rise in GDP in 2015 was 2.2%. Even though it was less than the previous year’s rise, it was among the highest in terms of developed economies.
According to the report, the rise was primarily attributed to the services industry, which grew by 0.52%. Construction and industrial production fell by 0.01% and 0.03%, respectively. Among other data, the Confederation of British Industry published the realized sales data at 16, slightly below the forecast of 18.
Impact on the market
The iShares MSCI United Kingdom ETF (EWU) reacted positively to the strong GDP release. It ended the day 1.3% higher on January 28, 2016. The First Trust United Kingdom AlphaDEX ETF (FKU) also rose by 0.87%.
Looking at British ADRs (American depositary receipts) and mining companies, BHP Billiton (BBL) was on a positive trajectory, rising 3.4%. Amec Foster Wheeler (AMFW), a construction company, rose by a significant 7.2%. Vodafone (VOD) fell by 1.1%, while Prudential (PUK) rose by 1.2%.