UK: First estimate of Q4 GDP as it came in at 0.6% - BBH

Analysts at BBH note that the main economic news has been the UK's first estimate of Q4 GDP as it came in at 0.6%, a touch above consensus, leaving the year-over-year pace unchanged at 2.2%.  

Key Quotes

“This estimate is based on a little less than half of the data that will eventually be in the final estimate.  Still, the pattern is clear.  Growth was narrowly based on services, while industrial production and construction were flat.  Within industrial production, though, manufacturing did increase (~0.7%).”

“The UK expanded by 2% in 2016, after 2.2% growth in 2015.  Some economists expected an immediate hit to the economy by the Brexit decision, but this did not materialize.  Many still expect the UK economy to weaken as a result.  The median forecast for this year from the Bloomberg survey is 1.2%.”

“Sterling reached almost $1.2675, the best level since the Fed hiked last month, before finding sellers who knocked it back down.  Although we have suggested that a few chart patterns and retracements converge near $1.28, we do think this is a counter-trend/correction and want to be on-guard for a failure.  To be anything significant from a technical point of view, sterling would need to be sold through $1.2500-$1.2520.”