Investing.com - The pound touched fresh seven-week highs against the U.S. dollar on Thursday after data showing that Britain’s economy expanded at a faster-than-expected rate in the fourth quarter.
GBP/USD hit highs of 1.2673, the most since December 14 and was last at 1.2634.
Britain’s Office for National Statistics reported that gross domestic product grew by 0.6% in the three months to December, above forecasts of 0.5% and matching the rate of expansion seen the previous quarter.
On an annual basis, the economy grew by 2.2%, slightly faster than the 2.1% growth expected.
Britain’s dominant service sector drove growth, expanding by 0.8%, while construction and industrial output lagged, the ONS said.
For 2016 as a whole, growth slowed slightly to 2.0% from 2.2% in 2015.
The data indicated that the June vote to exit the European Union has yet to take a toll on growth, but economists have warned that growth will be hit this year as the weaker pound pushes up inflation.
Chancellor Philip Hammond welcomed the growth figures, but warned that the economy still faces uncertainty.
Sterling was at one-month highs against the euro, with EUR/GBP sliding 0.2% to 0.8488.
Hopes for clarity on Brexit plans underpinned sterling, after the government said it would publish draft legislation later Thursday seeking parliament’s approval to trigger Article 50 and begin Brexit talks.
Meanwhile, the dollar firmed up after falling to fresh seven-week lows overnight.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.26% to 100.17 after falling to overnight lows of 99.77, its weakest level since December 8.
The index has fallen around 2% so far this month pressured lower by concerns over a lack of clarity on President Donald Trump’s economic policies and fears that his protectionist trade stance could hit corporate profits and act as a drag on growth.
On Wednesday, Trump gave the go-ahead to construction of a U.S.-Mexican border wall and prepared to impose curbs on immigration.