According to the United Kingdom's Office for National Statistics, the country’s GDP increased by 5.5% in the second quarter (quarter-on-quarter), way higher than expectations of a 1.5% decrease and the previous figure of 4.8%.
In yearly terms, the GDP rose by 23.6%, also higher than expectations of 22.2% and the previous quarter’s 22.2%.
Despite this, it seems that the economy has been losing momentum during the third quarter, which could encourage the Bank of England to reconsider its ultra-loose monetary policy stance. In any case, the Bank of England expects the economy to return to pre-pandemic levels in early 2022, signaling that it is considering hiking the cash rates as they expect inflation to be over 4%, which exceeds the bank's target.
"While the upward revisions to GDP are clearly welcome, Q2 was three months ago, and the recovery appears to have stagnated since," commented an analyst at Capital Economics. "Even so, given that there is now thought to be less spare capacity in the economy that will only encourage the Bank of England to hike rates in the not too distant future.”
The ONS recently revised up its 2020 GDP estimates. According to the new data, the economy shrank by 9.7% last year, improving substantially from the previous estimate which stood at 9.8%. The ONS claimed that their new estimates are so different because of improvements in data sources and methods.
The UK continues struggling with the spread of the COVID-19 virus. Since the beginning of the pandemic, 7,771,294 cases have been reported in the United Kingdom, including 136,525 total deaths associated with the pandemic, making it the most affected country in Europe.
To stop the spread of the virus, the government advanced a very ambitious vaccination campaign. So far, 93.6 million doses have been distributed among the local population, with 44.8 million individuals now fully vaccinated, accounting for 67.2% of the total population.
So far this week, the British pound fell by 1.82% against the US dollar, dropping for the fourth consecutive week. On Wednesday's session, the pound dropped by 0.83% against the greenback, closing at the 1.3422 level and losing ground for the second consecutive day.
By 8:51 GMT, the pound went up by 0.07% against the US dollar, hitting the 1.3432 level.