The GBP/USD price dropped after the United Kingdom released its economic data. The pair has been trading at 1.3121 for the past few days, 1.38% below its highest point this month.
UK GDP and house price data
In Q4, the UK economy improved regardless of the Omicron variant spread. As per the Office of National Statistics (ONS), UK’s GDP grew by 1.3%, translating to a year-on-year rise of 6.6%. Both performances exceeded Median estimates of 1.0% and 0.8%.
This improvement was broad-based, with various industries offering support. For instance, business investments rose by 1.0% in Q4. Personal consumption improved as well in Q4 regardless of the Omicron Variant effects.
The GBP/USD pair had a common reaction to the news since analysts predict that the UK will have weak economic performance. The main reason is the current Ukraine crisis which has led to a rise in the cost of living with an increase in the prices of commodities like wheat and crude oil.
Thus, the Bank of England (BOE) is concerned about a stagflation period where inflation rises accompanied by slow economic growth.
The GBP/USD pair also reacted mildly to UK’s house Price Index (HPI) latest data by Nationwide. It reported an increase in the country’s home prices by 1.1% monthly. Eventually, a 14.3% annual growth rate was recorded, the highest since 2004.
US jobs data ahead
The forthcoming Friday’s US Jobs data will be another significant catalyst for the pair. Economists believe that there will be an increase in the country’s nonfarm payrolls by 490k in March after a 678k rise in February.
Data by ADP reported a rise in jobs by over 555k in March on Wednesday. More data this week showed that vacancies remained above 11 million.
Analysts also expect the US labour market to improve. For instance, a 3.7% drop in the unemployment rate and an average hourly increase of 5.5%
