UK GDP increased by 0.7 percent in Q2 of this year, rising by 2.6 percent based on a year-on-year basis, according to data released by the Office of National Statistics (ONS).
The news helped to boost the GBP/USD by 0.17 percent, with the exchange rates rising from 1.5400 to 1.5429 after the ONS published its economic data.
In the UK, much of the growth seen in the second quarter of 2015 has been driven by greater demand for British exports
In the UK, much of the growth seen in the second quarter of 2015 has been driven by greater demand for British exports, which – along with the country’s robust services sector – has helped fuel an economic expansion over the last four years.
Q2 saw exports up 3.9 percent from the previous quarter. Imports have also risen slightly too, up 0.6 percent.
In fact, the success of British exports in recent months suggests that the UK government’s plan to rebalance the economy is finally seeing some traction, with exports up 8.1 percent from the year previous – the biggest increase in nearly four years.
With the UK economy going from strength to strength, and wages gradually beginning to improve, policymakers at the Bank of England must be feeling more comfortable about the prospect of raising interest rates.
Similarly, across the pond, the US Federal Reserve is no doubt weighing up whether or not to raise rates in September after its economy performed well above expectations, with Q2 growth rates being revised from 2.3 percent to 3.7 percent.
But interest rates, despite the positive GDP figures, may stay put, as increased market volatility caused by China’s decision to devalue its currency, along with the People’s Republic seeing its economic growth slowing somewhat, has prompted central banks to have a rethink.
