Pound Rallies on Strong UK GDP Data and Positive Brexit Headlines

The British pound today rallied higher against the US dollar following the release of the UK GDP monthly estimate for July, which came in above expectations. The GBP/USD currency pair’s rally was slowed down by the weak manufacturing output print, which indicated that manufacturing activity contracted in July.
The GBP/USD currency pair today rallied from a low of 1.2897 to a high of 1.3051 following the latest Brexit headlines released at the time of writing.
The currency pair was on a downtrend during the Asian session, but rallied higher in the early European session following the release of the latest UK GDP growth data by the Office for National Statistics. The GDP rose by 0.3% in July, which was higher than the expected 0.2% print, triggering the pair’s initial rally. The UK construction output for July also beat expectations by recording a 0.5% gain as opposed to the expected 0.5% contraction. The pair’s rally was weighed down by the unexpected 0.2% contraction in manufacturing output versus the expected 0.2% increase. The industrial production data also came in below expectations.
The currency pair exploded higher in the early American session after the EU’s chief Brexit negotiator Michel Barnier said that he sees the Brexit deal being completed in 6–8 weeks. The pair exceeded the highs reached on Friday after the EU chief’s announcement of flexibility in resolving the Irish border standoff.
The pair’s future performance is likely to be affected by tomorrow’s UK labour market report and Brexit developments.
The GBP/USD currency pair was trading at 1.3033 as at 13:32 GMT having rallied from a low of 1.2897. The GBP/JPY currency pair was trading at 144.79 having risen from a low of 143.05.

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