U.K GDP Q3 at 0.5%

There seems to be no surprises in the UK GDP release: quarterly growth remains 0.5%, and yearly growth is 2.3%. Among the internal components, we find a rise of 0.9% in business investment while services stand at 0.8%. Exports are up 0.7% and imports down 1.5%. All in all, the changes in the components offset each other.

Growth in the quarter was largely driven by a booming services sector, which grew 0.6% from the previous three months. Services — which accounts for everything from banking to waitressing — is the dominant sector the UK economy, making up roughly 80% of all GDP. Therefore, when it performs strongly, so too does the economy as a whole.

Business investment was estimated to have increased by 0.9% in the third quarter compared with the previous quarter, but was down 1.6% on the year.

Following a 1% drop in the second quarter, exports were up 0.7% in the third quarter, while imports fell 1.5% following a 1.3% jump the previous quarter.

On the production side, the dominant services sector rose 0.8 percent as estimated. Meanwhile, construction output decreased 1.1 percent instead of 1.4 percent.

Production output fell 0.5 percent versus prior estimate of 0.4 percent. Manufacturing dropped by revised 0.9 percent.

The expenditure-side breakdown of GDP showed that household spending and government expenditure increased 0.7 percent and 0.4 percent, respectively. Gross fixed capital formation advanced 1.1 percent.

Including the alignment adjustment, the level of inventories increased by GBP 3.1 billion in the third quarter, following an increase of GBP 3.0 billion in the prior quarter.

The trade balance deficit narrowed to GBP 12.4 billion from GBP 15.7 billion in the previous quarter.

Howard Archer, chief European and UK economist at IHS Markit, said: "While down from 0.7% quarter-on-quarter growth in the second quarter, this can still be considered a highly resilient performance in the aftermath of June's Brexit vote. Indeed, it was better than first quarter growth of 0.4% quarter-on-quarter."

Archer expects the UK economy to grow by 2.1% by end 2016. "This assumes that the economy will expand by a respectable 0.4% quarter-on-quarter in the fourth quarter. The October survey evidence was decent, while retail sales surged during the month. In fact, October's surge in retail sales suggests that there is a very real possibility that growth in the fourth quarter could again surprise on the upside."

Sterling/Dollar has been a major loser this year with the pair closing negative every month post Brexit. This pair remains heavily bearish on the daily timeframe with a resurgent Dollar reviving the parity dream. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. A decisive breakdown below 1.240 could trigger a steeper decline lower towards 1.220.