Pound jumps after UK GDP report

The pound is higher versus the US dollar after the UK announced stronger-than-expected growth figures.

The pound is trading at $1.5612, up 0.15% on the day, with traders buying the pound after the UK economy grew by 0.7% in the second quarter, an improvement on the initial reading of 0.6%. The slightly higher growth rate could be an indication that the Bank of England's quantitative easing (QE) scheme is working.

On Wednesday, Bank governor Mark Carney is expected to make an announcement. Mr Carney has already stated that QE will stay in place until the level of unemployment drops, and if his outlook is positive we could see the pound rally versus the dollar.

The pound lost ground versus the dollar yesterday as the US Federal Reserve said on Wednesday that tapering could take place between now and December. The latest US consumer confidence and new home sales are revealed at 3pm (London time). If the figures are strong it could lead to tapering starting sooner than originally thought, which might lead to a decline in the pound.

Spot FX GBP/USD chart

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