Sterling Strong Despite Poor Macroeconomic Data

The Great Britain pound was rather strong today. That is surprising considering that domestic macroeconomic reports were unhelpful, demonstrating the weakness of the British economy. The Brexit also continued to weigh on the currency, though today there was no major news about it.
Britain’s Office for National Statistics reported that the current account deficit narrowed to Â£25.2 billion in the second quarter of this year from £33.1 billion in the first quarter. While it was not a bad result by itself, the actual reading still failed to meet market expectations of a smaller £19.2 billion deficit.
British gross domestic product fell 0.2% in the June quarter from the previous three months according to the final estimate, unrevised from the preliminary report. The decline followed the 0.5% increase in the previous quarter. The services sector was the only positive contributor to growth. And even then, its 0.1% increase was the weakest in three years.
There were several other less important indicators released in the United Kingdom today, and most of them were also very unimpressive.
While there were no new developments in the Brexit process so far, the divorce between Britain and the European Union remains a key factor affecting the performance of sterling. With only a month left before the deadline, it is still unclear whether the UK and the EU will be able to reach a trade deal or at least to push back the deadline once again to have more time to find a consensus. While British Prime Minister Boris Johnson shows a hardline stance, saying that he is ready to leave the EU no matter what, neither side wants a no-deal Brexit to become a reality. But that does not mean that a hard Brexit is impossible.
GBP/USD was up from 1.2278 to 1.2302 as of 15:54 GMT today, touching the high of 1.2346 intraday. EUR/GBP declined from 0.8891 to 0.8868, and its daily low was at 0.8831. GBP/JPY rose from 132.61 to 132.97. GBP/CHF gained from 1.2171 to 1.2265, reaching a maximum of 1.2315 during the trading session.

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