Asia was reluctant to hold the pound and gradually traded cable down from 1.8785 to an early European low of 1.8758. UK names were buyers from the off and set themselves up nicely for the UK growth data. A pick up to 1.8783 ahead of the numbers. The data surprised to the topside with a 0.7% rise on the quarter and a 2.8% pick up on the year.
The GDP was better than forecast and has added strength to the market"s view that the BoE will tighten policy at the November meeting. Strength in the service sector was a highlight along with a healthy rise in manufacturing output. There is a warning in yet another set of above trend growth numbers that the fourth quarter could struggle to keep the trend going.
Expectations of a follow up hike to a November move are now heavily dependant on November's data releases. GBP/USD was trading around 1.8780 before the data and ranup to new two-week highs of 1.8735. Little in the way of resistance until the 1.8775 highs from October 6. Once the data dust settles look for Sterling to consolidate above the 1.8800 level.
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