2022.05.1209:27:00UTC+00Pound Falls As UK GDP Growth Slows, European Stocks Drop

The pound weakened against its major counterparts during the European session on Thursday, as the U.K. economy expanded at a slower pace in the first quarter and hot U.S. inflation data intensified concerns about aggressive interest rate hikes by the Federal Reserve.

Data from the Office for National Statistics showed that gross domestic product advanced 0.8 percent sequentially, slower than the 1.3 percent increase in the fourth quarter and the economists' forecast of +1.0 percent.

The trade deficit for goods and services widened to a record 5.3 percent of nominal GDP in the first quarter, largely reflecting a sharp increase in goods imports.

In March, GDP slid 0.1 percent after no growth in February. The main contributor to the decline was the 0.2 percent decline in services output.

European stocks fell as strong U.S. inflation data fueled concerns that the Fed will tighten monetary policy aggressively in the coming months.

The pound reached as low as 1.2180 against the dollar, its lowest level since May 2020. The pound may locate support around the 1.20 level.

Against the yen, it was down at near a 2-month low of 156.59. On the downside, 153.00 is possibly seen as its next support level.

The pound slipped to a 6-day low of 1.2129 against the franc from yesterday's close of 1.2159. The pound is seen finding support around the 1.19 mark.

The pound, however, rebounded to 0.8561 against the euro, after falling to 0.8618 at 2:05 am ET, which was its lowest level since September 2021. The pound is likely to face resistance around the 0.84 region, if it gains again.

Looking ahead, U.S. PPI for April and the U.S. weekly jobless claims for the week ended May 7 will be featured in the New York session.