GBP/JPY steadies near 1-month peak as UK GDP growth matches estimates

The GBP/JPY currency pair moved within a narrow range on Thursday, while holding near a 1-month peak, after data showed the UK economy had returned to growth in August.

The UK GDP grew by 0.2% month-over-month in August, in line with market consensus, following a revised down 0.6% contraction in July.

August has been the fifth month of GDP expansion so far this year, as the services sector contributed the most to growth. UK services segment grew 0.4% in August after a 0.6% contraction in July, driven by a 4.7% growth in architectural and engineering activities and a 2.3% increase in legal activities.

Conversely, UK industrial output continued to decrease in August, by 0.7% month-over-month, as manufacturing production shrank 0.8% from a month ago with 9 of its 13 sub-sectors registering a decline.

Weakness in UK construction segment also persisted, as it contracted 0.5% in August.

Meanwhile, Bank of England policy maker Swati Dhingra told the BBC the UK economy had already flatlined and about 20% or 25% of the impact of monetary policy tightening had fed through to the economy.

In case economic growth falls by much more than the BoE’s Monetary Policy Committee anticipates from this point on, a rate cut may occur sooner, Dhingra said.

As of 7:20 GMT on Thursday GBP/JPY was inching down 0.01% to trade at 183.605. Earlier in the session, the minor Forex pair went up as high as 183.814. The latter has been the pair’s strongest level since September 15th (183.909).