UK Growth Surges, Sterling Underpinned, FTSE 100 Prints a Fresh High


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GBP/USD and FTSE100 Analysis and Charts

UK economy ‘going gangbusters’ – Office for National Statistics.Sterling underpinned, FTSE 100 continues to print record highs.

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The UK economy grew by 0.6% in the first quarter of the year, driven by a 0.7% increase in services output, beating analysts’ forecasts and ending the technical recession seen last year. Nominal GDP is estimated to have grown by 1.2% in Q1. According to ONS chief economist Grant Fitzner, ‘ to paraphrase the former Australian Prime Minister Paul Keating, you could say the economy is going gangbusters.’

Full ONS Q1 GDP Report

For all market-moving economic data and events, see the DailyFX Economic Calendar

Interest rate cut expectations were pared back marginally post-data. The first 25 basis point BoE cut is seen in August, although the June meeting remains a live event, with the second cut forecast for November.

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Cable (GBP/USD) moved slightly higher after the data release, helped in part by a weak US dollar. The 200-day simple moving average (1.2541) is now blocking a further higher and unless US data out later today weakens the greenback further, short-term cable upside may be limited.

GBP/USD Daily Price Chart

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IG Retail data shows 57.48% of traders are net-long with the ratio of traders long to short at 1.35 to 1.The number of traders net-long is 9.60% lower than yesterday and 19.72% higher than last week, while the number of traders net-short is 2.23% higher than yesterday and 13.42% lower than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.

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of clients are net long.




of clients are net short.

Change in

Longs

Shorts

OI

Daily
-5%
6%
-1%

Weekly
31%
-4%
14%

The FTSE 100 continues to post fresh all-time highs, with today’s GDP data sending the UK big board through the 8,400 barrier. The ongoing re-rating of the FTSE 100, and increased M&A activity has seen the index surge by around 1,000 points off this year’s low. Six green candles in a row underscore this week’s rally. Going into the weekend, the index may slow, but with UK economic confidence growing further, the outlook remains positive.

FTSE Daily Price Chart

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What is your view on the British Pound and the FTSE 100 – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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