Pound jumps as UK economy grows 0.7 per cent in the second quarter

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The pound jumped against the dollar as data showed Britain's economic recovery picked up pace in the second quarter of this year.

Read more: These charts show just how dependent UK growth is on London

The Office for National Statistics (ONS) said the economy grew by 0.7 per cent between April and June, from 0.4 per cent in the previous quarter, and in line with economists' expectations.

It means that the annual rate of growth rose to 2.6 per cent, compared to 2.4 per cent in the first quarter of 2015.

It also marks the UK economy's 10th successive quarter of expansion – meaning it is experiencing its best run of growth since 2008.

Services output, which accounts for around 75 per cent of gross domestic product, increased by 0.7 per cent. Industrial production rose by one per cent, construction growth was flat, and agriculture fell by 0.7 per cent.

This is a preliminary estimate using around 44 per cent of the available data used to calculate the final figure, and so it can be subject to subsequent revisions.

Chris Williamson, chief economist at Markit, pointed out that exports continued to be a weak spot. 

“Net trade acted as a 0.6 per cent dampener on GDP in the first quarter. The current account deficit also remained worryingly high, at 5.8 per cent of GDP in the opening quarter of 2015. The deficit hit 5.9 per cent of GDP over 2014 as a whole, the highest since records began in 1948."
 
"Clearly the economy remains worryingly imbalanced, with domestic consumers providing the main driver of growth and exports once again acting as a drag."
 
Although Bank of England governor Mark Carney has hinted that a hike in interest rates could come by the end of the year, the figures could dampen his decisiveness.
 
"Policymakers will be worried about the poor export performance, and also concerned that the economy may be slowing in the summer as sterling’s strength continues to hit competitiveness," Williamson continued.
 
PMI data for May showed one of the weakest expansions in business activity seen over the past two years, with the slowdown spreading from manufacturing and construction to services. June data are updated later this week and will be closely watched for clues as to the economy’s momentum heading into the second half of the year.