GDP Better Than First Thought

The latest UK economic data released today offered some further encouragement for GBP bulls. Following the record-breaking economic slump recorded over early 2020, during the height of the pandemic, the UK economy bounced back quicker than expected into the latter end.

The data released from the ONS today showed that the UK economy rose by 16.9% and 1.3% respectively, marking an upward revision from the original data given for both quarters. While GDP was still negative on the year as a whole, at -9.8% the total reading was again a little better than the originally recorded -9.9% reading.

Trade Deficit Widened Further

The economic hit suffered by the UK over the course of the pandemic has been among the worst suffered by countries in the OECD with only Spain and Argentina taking a bigger hit. According to the ONS, the UK also saw its trade deficit widening to £26.3 billion in Q4, almost double the widening seen in Q3.

UK Data continuing to Improve

This latest batch of data follows the recent trend of UK data improving, offering hope for the continued recovery in the UK. This week, the UK lockdown laws eased again with the PM allowing for groups of six to meet outdoors. This comes ahead of the highly anticipated April 12th date when pubs and restaurants will be allowed to serve customers al-fresco, along with the return of non-essential retail, gyms ad hair and beauty salons among others.

Vaccination Momentum Growing

The current mood of optimism is being supported by the UK vaccination drive which has seen over 30 million people receiving their first dose of the vaccine. The progress made here has been credited for slashing transmission rates and bringing the number of new infections down as the government continues to move further down the age groups, now vaccinating the under 50s.

Lockdown To End On June 21st

If the UK is able to continue along the currently scheduled path to re-opening, the UK is due to remove the legal obligation to social distance as of June 21st, marking a full reopening of the economy. With infection rates and the death toll dwindling, the government has reassured the UK that it intends to press ahead with the current milestones and sees no reason for delay. While the current momentum in the vaccination push remains, sentiment is likely to stay bullish for the UK, particularly when compared with the EU which is suffering from a much slower and more disrupted vaccination drive and the outbreak of a third wave of the virus which has seen many countries extending, or returning to, lockdown.

Technical Views

EURGBP

The sell-off in EURGBP is continuing this week with price probing below the .8544 level. While below here the .8274 level is the next downside target for bears. This is a key long-term level and a break of this region will be a firm, bearish development. To the topside, bulls would need to see a break back above the .8861 region to alleviate near term bearishness.

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