UK economy went out of the dip

According to the data released today, UK GDP added 0.5% in the first 3 months of 2010 after losing the same amount in fourth quarter of 2010. Analysts at Capital Economics claim that British economy has only reversed the dip without going forwards.

As a result, the opposition’s criticism of the government's austerity measures is likely to strengthen, while the possibility of the BoE rate hike may decline though inflation twice exceeds the central bank's 2% target.

Never the less, pound managed to gain on the news as investors were preparing for worse outcome, says Danske Bank. The market was also pleased with the encouraging readings of the key indicators that showed the 0.9% quarter advance in services and 1.1% manufacturing growth. The weakest link was the construction that contracted by 4.7%.

Resistance levels for the pair GBP/USD are found at 1.6600 (April 21 maximum), 1.6715 (December 2009 maximum) and 1.6750 (November 25/2009 maximum). Support levels are situated at 1.6550 (April 25 maximums), 1.6515/20 (previous day maximum) and 1.6430 (April 26 minimum).

Chart. Daily GBP/USD