UK Q4 prelim GDP beats expectations, post quarterly growth of 0.6 pct

In a report by the Office for National Statistics (ONS), preliminary estimate of UK GDP for 2016 Q4 showed quarterly growth of 0.6 percent, the same growth rate as in the two previous quarters and above the 0.5 percent consensus forecast. GDP growth was also above the Bank of England’s estimate of a 0.4 percent rise in its November Inflation Report.

Q4 reading taken in conjunction with Q3’s gain suggests UK economy grew faster in the six months following the Brexit vote than it did in the six months preceding the vote. Annualised GDP reads at 2.2 percent confirming the UK as one of the fastest-growing major economies in the world.

"Strong consumer spending supported the expansion of the dominant services sector and although manufacturing bounced back from a weaker third quarter, both it and construction remained broadly unchanged over the year as a whole,” says ONS Head of GDP, Darren Morgan.

From a currency perspective, the beat on expectations should solidify the Pound’s recent relief rally. GBP/USD was trading at 1.2653 from around 1.2664 ahead of the release of the data, EUR/GBP was at 0.8481 from 0.8476 earlier.

"The UK economy maintained solid growth momentum at the end of 2016, with still no negative signs of the Brexit vote in June. Although the near term outlook is looking bright, our expectation is that growth will ease as we move further into 2017." said Nordea Bank in a report.