European session review: GBP appreciates, helped by better-than-expected Q1 GDP data out of UK

USD rose against most of its major rivals in the European session on Wednesday as stronger-than-expected March growth figures from the United Kingdom bolstered investors' optimism about a strong recovery of the country's economy from the pandemic-induced contraction last year.

The Office for National Statistics (ONS) reported that its preliminary estimate showed that the UK's economy contracted by 1.5 percent q/q in the first quarter of 2021, following a 1.3 percent q/q growth in the fourth quarter of 2020. Economists had expected a 1.6 percent q/q drop. On a yearly basis, GDP shrank 6.1 percent, matching economists' forecasts. In March alone, the British economy expanded 2.1 percent m/m, recording its fastest monthly growth since August 2020. This marked a significant improvement from +0.7 percent m/m in February, as schools in some parts of the UK reopened throughout the month as the UK’s government continued to move forward with its lockdown easing plans. 

Another data showed that the UK’s trade deficit widened to GBP 11.71 billion in March from GBP 10.51 billion in February.

On Monday, the UK's Prime Minister Boris Johnson confirmed that the next stage of coronavirus lockdown easing in England will begin on May 17, as part of the government's four-step roadmap to ending lockdown by the summer.