Pound pushes higher on better GDP but other signals aren't so good
Sometimes it's the little things that count and GDP getting above 2.0% y/y in the last quarter may not sound like much but psychologically it reads much better than being below 2.0%. We finish the year at 2.3%, above the 2.2% expected.
Business investment stayed soggy in the quarter but again, hitting 3% y/y makes it look that tiny bit better.
Consumer spending stayed steady at 0.6% but disposable income dropped 0.6%. It's been said in the notes that incomes haven't kept up with price rises.
The Q4 current account numbers stink. They put the deficit to GDP at 7.0% vs 4.3% in Q3. For 2015 as a whole that puits it at 5.2% of GDP, the biggest ever.
Brexit may be playing a big hand in that. The ONS say that the primary income deficit part of the numbers show that Brits earned less from investments abroad, while money flows out increased to those investing in Britain by way of dividends and bond repayments, among others. That's not such a bad thing in itself as it shows that the UK is doing well enough to give returns to investors. The negative side was that less money was coming into the country.
Overall there's good points and bad points, as is always the case. I doubt the final numbers change many minds about the BOE and when they hike but this report will quiet many of the doom mongers for a while. We'll see whether they start crowing again when we see what Q1 looks like ;-)
For the pound, we've tried to have a look at 1.4400 but came up a handful of pips short. There's nothing in the data that's going to send us anywhere new but we might see the bid remain for a while longer.
GBPUSD 15m chart
The support stands out pretty clearly around 1.4325/30. Look for some of that to have stepped up to 1.4350 now. If we push back up above 1.4400 then we might get another look at the highs.