The British economy grew by 1.3 per cent in the last three months of 2020, exceeding the preliminary estimate of 1.0 per cent. The final GDP numbers also outstripped the initial market expectations, which were projecting no economic expansions.
The quarterly economic report, published by the Office for National Statistics, revealed a sizable increase in business investment (5.9 per cent vs 1.3 per cent in the preliminary report). This upward revision resonates with the economic projections of Andrew Bailey, Governor of the Bank of England, who anticipates the robust recovery to continue.
The better-than-expected growth rate data is also subject to higher government spending (6.7 per cent vs the initial reading of 6.4 per cent). Meanwhile, the globally recuperating consumer confidence is likely to continue supporting global growth.
The ongoing stabilisation in the U.K. is made more apparent by the expanding labour market and growing industrial activity. Hence, BOE's projections for sustained GDP growth in the second and third quarters of 2021 is more than likely to be realised.
Today's data had a positive impact on the British pound, which gained monetarily against the U.S. dollar. Nevertheless, the prevailing market sentiment on the GBPUSD continues to be ostensibly bearish.
As can be seen on the 4H chart below, the pair's price action appears to be in the process of establishing a massive Falling Wedge pattern. It has already tested the pattern's upper and lower boundaries on two separate occasions each, which presupposes the likely continuation of the downtrend.
This assertion is confirmed by the latest reversal from the upper boundary of the Wedge, which happened at a time when the pattern was being crossed by the 50-day MA (in green), serving the role of a floating resistance.