Pound Strengthens As U.K. Economic Growth Improves More Than Forecast

The pound firmed against its major counterparts in early European deals on Friday, after a data showed that the UK economy expanded at a slightly faster pace at the end of 2017.

Preliminary data from the Office for National Statistics showed that gross domestic product grew 0.5 percent sequentially in the fourth quarter, faster than the 0.4 percent logged a quarter ago. The rate was forecast to remain at 0.4 percent.

On a yearly basis, the economy expanded 1.5 percent, slightly faster than the 1.4 percent growth economists had forecast.

Another report from ONS showed that the index of services climbed 0.4 percent month-on-month in November, which was the biggest expansion since August 2016.

In three months to November, services output increased 0.4 percent from three months ended August.

The currency has been trading in a positive territory in the Asian session.

The pound strengthened to 1.4281 against the greenback, from a low of 1.4107 hit at 5:45 pm ET. If the pound rises further, 1.45 is likely seen as its next resistance level.

The pound reversed from an early low of 154.60 against the yen, rising to 155.67. Continuation of the pound's uptrend may see it challenging resistance around the 160.00 area.

The pound staged a brief recovery to 1.3332 against the yen after the data, off its prior low of 1.3291. The next possible resistance for the pound is seen around the 1.34 level.

Data from the Ministry of Internal Affairs and Communications showed that Japan consumer prices rose 1.0 percent on year in December.

That was unchanged from the November reading, although it came in beneath expectations for a gain of 1.1 percent.

The pound climbed to 0.8726 against the euro, following a decline to 0.8769 at 1:15 am ET. The pound is seen finding resistance around the 0.86 region.

Survey of Professional Forecasters published by the European Central Bank showed that the near term inflation is expected to rise more than previously projected.

Forecasters raised their inflation outlook for 2018 to 1.5 percent from 1.4 percent. Likewise, the outlook for 2019 was lifted to 1.7 percent from 1.6 percent. Inflation is seen at 1.8 percent in 2020.

Looking ahead, Canada consumer prices, U.S. wholesale inventories and durable goods orders, all for December, as well as U.S. advanced GDP for the fourth quarter are set for release in the New York session.

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