UK Q4 GDP revised higher to 0.7 pct in second estimate, boosted by growth in manufacturing and construction

Second estimate from the Office for National Statistics (ONS) showed Wednesday that U.K. economy expanded more than initially estimated in the fourth quarter. The second estimate of UK GDP for Q4 2016 saw growth revised up to 0.7 percent q/q from the previous estimate of 0.6 percent stronger than consensus expectations.

The first estimate of the expenditure breakdown for Q4 which was provided in the report showed that consumer spending continued to be a key driver of economic growth. Export growth was much stronger than expected, an indication that the boost to competiveness from sterling’s slide is having an impact.

Seperate report from ONS showed that gross fixed capital formation was unchanged at GBP 78.0 billion in the fourth quarter. Meanwhile, business investment dropped 1 percent to GBP 43.5 billion. Services output increased 0.2 percent in December from November, marking the seventh consecutive month-on-month positive services growth. Services output grew 0.8 percent in Q4 from prior quarter, with a notable contribution in consumer focused industries.

Pound hits two-month high against euro as UK economy grows at fastest rate in a year. EUR/GBP hit highs of 0.8448 before edging lower to trade at 0.8435 at around 1100 GMT.

"While today’s upward revision is yet another indication that economic growth in the second half of next year was stronger than the Bank of England had expected it is unlikely to have a significant impact on the thinking of the majority of the BOE’s rate setting committee." said Lloyds Bank in a report.