GBP flows: GBP slightly firmer after GDP, but...

EUR/GBP has moved around 10 pips lower to 0.8340 on the back of a stronger than expected UK Q4 GDP numbers, which showed a rise of 0.1% against market expectations of a 0.1% decline. However, the data is still not particularly encouraging. From an output perspective, the gain was, once again, entirely in services, and from the expenditure side, the rise was due entirely due to the change in inventories. Business investment fell and household consumption was flat. Furthermore, GDP per capita fell 0.1%. None of this suggests any significant strength, and shouldn’t really change market expectations of BoE policy. While EUR/GBP has edged a touch lower, we would expect the 0.83 level to remain strong support and still see medium term risks on the upside.