Forex - GBP/USD extends rally after U.K. GDP data

The pound extended gains against the dollar on Thursday, rallying more than 1.2% after data showed that the U.K. economy returned to growth in the first quarter, avoiding a triple-dip recession.

GBP/USD hit 1.5460 during European afternoon trade, the pair’s highest since February 19; the pair subsequently consolidated at 1.5455, advancing 1.24%.

Cable was likely to find support at 1.5263, the session low and resistance at 1.5549, the high of February 19.

The Office for National Statistics said U.K. gross domestic product expanded by a seasonally adjusted 0.3% in the three months to March, above expectations for a 0.1% gain. 

The U.K.’s economy shrank by 0.3% in the final quarter of 2012.

The U.K. economy expanded 0.6% in the first quarter from a year earlier, compared to expectations for a 0.3% increase. 

The ONS said the largest contribution to the increase came from the service sector, which grew by 0.6% in the first quarter. 

The construction sector remained in contraction territory, shrinking 2.5%. This was partially offset by a 0.2% increase in the production sector.

U.K. Chancellor George Osborne welcomed the report, saying the positive data was an encouraging sign that the economy is healing.

Elsewhere, sterling rose to three-week highs against the euro, withEUR/GBP falling 0.82% to 0.8454.

The U.S. was to produce the weekly government report on initial jobless claims later in the trading day.

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