Investing.com – The pound dropped against the U.S. dollar on Friday, after the release of downbeat UK economic growth data, while hopes for an upcoming U.S. tax overhaul continued to lend support to the greenback.
GBP/USD was down 0.43% at 1.3383 by 04:45 a.m. ET (08:45 GMT), re-approaching Thursday’s two-week lows of 1.3344.
The UK Office for National Statistics reported on Friday that the UK gross domestic product expanded 1.5% in the second quarter, year-over-year, down from a previous estimate of 1.7%.
On a quarterly basis, the UK economy grew 0.3% in the three months to June, in line with analysts’ expectations.
A separate report showed that the UK current account deficit widened to £23.2 billion in the second quarter from £22.3 billion in the first quarter of 2017, whose figure was revised from a previously estimated deficit of £16.9 billion.
Analysts had expected a current account deficit of £15.8 billion for the second quarter.
The pound had found some support after UK Brexit Secretary David Davis said on Thursday that “considerable progress” had been made in talks with the European Union.
However, EU chief negotiator Michel Barnier warned that Britain was “months” away from being able to negotiate a future trade deal, with huge divisions still remaining.
Meanwhile, the greenback was boosted after U.S. President Donald Trump unveiled a plan on Wednesday calling for lower tax rates for businesses and individuals as part of a comprehensive overhaul of the U.S. tax code.
However, the proposal still faces an uphill battle in the U.S. Congress, with the Republican Party divided over it and Democrats hostile.
Sentiment on the U.S. dollar also remained supported since Fed Chair Janet Yellen called for gradual rate hikes in a speech on Tuesday.
Market participants were looking ahead to the release of U.S. reports on personal spending and consumer sentiment due later Friday, for further indications on the strength of the economy.
Sterling was lower against the euro, with EUR/GBP advancing 0.50% to 0.8813.