British pound trimmed gains against the US dollar on UK GDP

British pound shorted gains against the US dollar on Thursday after released UK Gross domestic product data disappointed expectations.

GBP/USD pair tumbled to a session low and a three-week low at 1.5270 at 8:53 GMT. The cross erased 0.31% for the day. Support was likely to be received at June 3rd low, 1.5190, while resistance was to be met at current session high, 1.5348.

The Office of National Statistics (ONS) reported that the Gross domestic product of the United kingdom rose by 0.3% during the first quarter of the year, meeting both expectations and results during the preceding quarter. In annual terms, however, UK GDP grew by 0.3% during the first three months of 2013, mismatching the projected 0.6% increase. In Q1 2012, compared to Q1 2011, UK economy registered a 0.6% rise. The ONS also added that British economy shrank by 7.2% in the aftermath of the 2008 financial crisis.

Additionally, it became clear that Total Business Investment indicator in the United Kingdom recorded a considerable decline during Q1 2013, compared to Q1 2012, by 16.5%. This result was far below the projected 0.7% increase. The indicator is based on a quarterly survey among 32 000 companies, operating in the private sector, and encompasses capital expenditures. Business investments dropped by 1.9% during Q1 2013, compared to Q4 2012, an extended decline if we take into account the results during the previous period, when investments contracted by 0.4%.

Meanwhile, the greenback was supported by market expectations of Federal Reserve Bank reducing the scale of monthly bond purchases by this year’s end, despite the downward revision of US final Gross Domestic Product.

Pound slid to session lows against the euro as well, as EUR/GBP cross added 0.43% to 0.8530. Earlier today reports showed that Spanish annual consumer prices inflation, evaluated in accordance with the harmonized methodology, accelerated in June due to high fuel prices, to reach 2.2%, above projections of a 2.0% change. In May the index showed a 1.8% increase. In the mean time, retail sales in Spain dropped by 4.5% in May on annual basis, widening the gap in comparison with the 2.6% decrease in the preceding period.

Ultimately, lending conditions in the single currency zone deteriorated, as household and business entities lending significantly shrank, according to data by the European Central Bank. Private Sector Loans decreased by 1.1% in May, after the drop by 0.9% in April. Loans towards companies in the non-financial sector declined by 17 billion EUR in May, affirming the rate of decrease during the previous month.