GBP/USD has been bullish on longer term charts but made a reversal lower three weeks ago and it has been trading on a steady bearish trend since then.
GBP/USD has been bullish on longer term charts but made a reversal lower three weeks ago and it has been trading on a steady bearish trend since then. The pound has been under pressure since then although it initially experienced a rise in value against the USD after a moderation in the US Consumer Price Index (CPI) on Thursday, indicating a slowdown in the core YoY CPI. However, the pound’s gains were short-lived, as it later fell below 1.27 against the dollar to close the week.
This price action in the cable is seen as a reflection of broader market trends though. Despite changes in the risk trades, the US dollar has shown strength against various currencies, including the Euro and Japanese Yen. Moving averages have been acting as resistance at the top for GBP/USD , particularly the 50 SMA (yellow) on the H4 chart. The June and Q2 GDP figures were better than expected, but this pair continued the downtrend despite that, so we remain short on GBP/USD and will try to sell retraces higher next week.
UK Q2 GDP Report Released by ONS – 11 August 2023
- Q2 preliminary GDP +0.2% vs 0.0% expected
- Q1 GDP was +0.1%
- GDP YoY +0.4% vs +0.2% expected
- Prior GDP YoY +0.2%
- June monthly GDP MoM +0.5% vs +0.2% expected
- May monthly GDP MoM was -0.1%
The British pound experienced a 50 increase in value based on the reported numbers. This is attributed to the better-than-expected June monthly Gross Domestic Product (GDP) data, which has contributed to a more positive overall outlook for the second quarter (Q2). The UK’s GDP is now estimated to be only 0.2% below its pre-pandemic level in the fourth quarter of 2019. This is a favorable development, surpassing expectations. However, concerns regarding the UK economy and the potential risks of stagflation to the future outlook still remain.
The positive impact of the monthly GDP beat also influenced the Q2 GDP figures. Breaking down the contributions, the services sector added 0.16% to the growth, production contributed 0.25%, and construction contributed 0.11% on a monthly basis. The improvement in the services sector is particularly noteworthy, especially considering its stagnation in the previous month of May.
GBP/USD Live Chart
GBP/USD
www.fxleaders.com