Pound Spikes Higher as UK GDP Beats Estimates Despite COVID-19

The Sterling pound today spiked higher against the US dollar after the release of multiple positive UK fundamental reports including positive GDP data earlier today. The GBP/USD currency pair rallied higher as investors reacted to the positive reports, which indicated that the British economy fared surprisingly better than expected during Q1 2020.
The GBP/USD currency pair today spiked from an opening low of 1.2251 to a high of 1.2301 after the releases before giving up some of its gains to trade lower at the time of writing.
The currency pair spiked higher despite the deepening coronavirus crisis in the UK as the number of deaths caused by the pandemic crossed 50,000. Rishi Sunak the UK Chancellor of the Exchequer yesterday announced that the British government would extend its costly furlough scheme to October. The British government is currently paying over 80% of the salaries of about 7.5 million workers who have lost their jobs. The release of the preliminary UK GDP report for Q1 indicating that the British economy contracted by 2.0% in Q1 as opposed to the expected 2.5% contraction boosted the pair. The monthly GDP print also beat analysts estimates.
According to the Office for National Statistics, the UK’s industrial production fell 4.2% in March versus the expected 5.6% decline, also boosting the cable. However, the country’s trade deficit expanded to 6.67 billion in March, which was higher than expected, dragging the pair lower.
The currency pair’s future performance is likely to be affected by COVID-19 headlines and US dollar dynamics.
The GBP/USD currency pair was trading at 1.2280 as at 09:24 GMT having fallen from a high of 1.2301. The GBP/JPY currency pair was trading at 131.41 having dropped from a high of 131.80.
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