British Pound Drops Against US Dollar Despite Positive Revision for UK GDP

The British pound dropped against its US counterpart on Wednesday, even as the gross domestic product growth in the United Kingdom during the last quarter of 2016 was revised higher. Demand for the US dollar was higher today following the release of the minutes of the Federal Reserve’s latest policy meeting, which signaled that interest rates could be raised soon.

In the United Kingdom, the Office for National Statistics released its second estimate of the gross domestic product growth in the fourth quarter of 2016. The release said that UK gross domestic product rose 0.7% in the quarter, which is 0.1% higher than the initial estimate.

However, the British pound failed to gain any momentum following the announcement as the annualized growth rate was reduced 0.2% to 2.0%. The release added that business investment dropped by 1.0% during the quarter, which ended December.

Meanwhile in the United States, the minutes of the Federal Open Market Committee’s latest meeting, which was held on January 31 and February 1, were released earlier today. Investors, who highly anticipated the release, found hints of a possible increase in US interest rates sooner rather than later.

Policy makers discussed the effect of promises made by President Donald Trump, and expressed the view that it might be appropriate to raise interest rates soon. Trump promises include lower taxes and higher fiscal spending.

GBP/USD traded at 1.2454 as of 19:20 GMT on Wednesday, from 1.2425 at 18:05, the pair’s lowest level since yesterday. GBP/USD started the day at 1.2485.

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