British Pound Rallies Following GDP Revisions, but GBPUSD Fails to Break 1.4350

The British pound was mixed on Friday after GBPUSD rallied for a testing of former support at 1.4350, but subsequently backed down. UK economic data was slightly better than forecasted, as the preliminary reading of Q2 GDP was revised up to -0.7 percent from -0.8 percent, while the annual rate was revised to -5.5 percent from -5.6 percent, though this was still the worst annual decline since recordkeeping began in 1955. A breakdown of the report showed that revisions were due to manufacturing, energy extraction and wholesale and motor vehicle services, improvements that were partly the result of a government scrappage program that offered subsidies to consumers who traded in old cars for new ones. On the other hand, consumer spending and investment remained weak at -0.7 percent and -4.5 percent, respectively. While there are still major downside risks for growth in the UK, leading indicators for GDP like PMI services and PMI manufacturing have shown signs of expansion in July. Nevertheless, PMI readings above 50 for the months of August and September would be necessary to indicate a legitimate bounce.