Pound noted its two days weakness versus one of the most important currencies, the US Dollar. Before, the GBP / USD touched its lowest record in three days. That was in the level of 1.3775 before touching the new position, 1.3800.
That has happened after the data release of British GDP. The ONS or UK Office for National Statistics reported that the decline is the worst one in history. Fortunately, the England economy growth for the IV / 2000 quarter is higher.
That growth was even higher than what people or market participants are expected. That is why; the situation brings a new hope for the market participants. However, the level may change at any time. People are now still highlighting that.
The British GDP Growth Data
Based on the data it is known that the England GDP growth for the IV / 2000 quarter is +1.0%. It is also called the ‘quarter-over-quarter’. It is better than the estimation of +0.5% although it is lower than the +16.1% achievement in the past quarter.
Furthermore, the GDP is also having a better growth. It is from -8.7% becomes -7.8% in a year-on-year position. It means that they are better than the estimation of -8.1%. The yearly note is estimated will be slipped up to -9.9%.
That was for the year 2020. However, a recovery that happened at the end of the year could be a positive catalyst. It means that the technical recession is likely to be avoided. How about the third COVID-19 lockdown which may be applied?
That decision is for sure will make the economic position declines in January. However, there is a possibility that GDB is going to be experiencing a rebound. That could be sharper in the second quarter of 2021. That was stated by an expert.
The British GDP January Estimation
Capital Economics projected that the British GDP for January 2021 can be worse than December 2020. However, the massive effort on vaccination will speed up the lockdown easing in that country and all areas worldwide. The effectiveness is also awaited by people.
That is why; they predicted that the England economic condition can be back again to the pre-pandemic scale. That may happen in the first quarter of 2022. If that projection was absolutely right, several changes or steps could be taken in the future.
The example is that the Bank of England (BOE) or government doesn’t need to give more stimuli. The present British GDP data release is responded to positively by the market participants. The pound is stronger than the USD and some other major currencies.
The Possibility of A Long-Term Outlook
The long-term outlook of the Pound is still solid bullish. However, the effort of the short-term rally is maybe a little bit difficult because the movement is not only affected by the domestic economic condition but also more than that. So, what is that reason?
The relation between the British – European Union is getting worse lately. It becomes a really important point. The European Parliament stated that they have a plan to delay the after-Brexit sales ratification deal which has been reached in Christmas 2020. What is the reason?
The strongest reason is that England is also delaying the solution to overcome the issue in Northern Ireland. Last Wednesday, Andrew Bailey as the Governor of BOE for the first time delivered his warning to the European Union.
He said that the equivalent process after Brexit between England and the EU is not clear. The process which is meant here is the one that will be used by the EU regulator. Before, it is made to give access for the British Company to the European market.
