UK economic activity showed stronger growth in November, supported by better-than-expected output in the services sector. Overall GDP rose by 1.4% year-on-year, surpassing the 1.1% forecast, after a previous 1.1% increase.

Breaking down the key sectors:

– Services output increased by 0.3% month-on-month, beating expectations of a 0.1% rise and recovering from a prior 0.3% decline.
– Industrial output grew by 1.1%, well above the 0.1% forecast, and in line with a revised prior figure of 1.3%.
– Manufacturing output showed a robust 2.1% monthly gain, significantly exceeding the 0.5% expected and a prior revised increase of 0.4%.
– Construction output, however, fell by 1.3%, below the forecast of no change and deteriorating from a previous decline of 1.2%.

Despite these positive signals in activity, the data release lags behind current conditions and is unlikely to shift the Bank of England’s economic outlook at this stage. Inflation figures remain the central bank’s primary focus, with the rising cost of living still posing a significant challenge that must be addressed in 2024.

For forex traders, the stronger-than-expected UK output data may support the pound in the near term. However, attention should remain on upcoming inflation reports and BOE commentary, as these will have the greatest impact on monetary policy expectations and currency movements.

Original Source: Justin Low of investinglive.com