Pound Under Pressure
The British Pound has come under fresh selling pressure today after the latest UK economic data this morning came in below forecasts. UK GDP printed -0.1% MoM, below the prior and expected 0.2% reading. Similarly, preliminary quarterly GDP was seen at 0.1%, down from 0.5% prior and below the 0.2% the market was looking for.
UK Data Weakening
On the back of the uptick in the unemployment rate seen earlier this month, the GBP picture has turned more negative recently, putting fresh focus back on expected BOE easing. Following the latest meeting, traders had scaled back expectations of a further BOE rate cut this year. However, with data weakening, the BOE might still opt for a further cut next month.
UK Inflation on Watch
This decision will likely hinge on next week’s UK inflation data. In particular the market will be looking at the services inflation reading, a gauge which has been cited by the BOE as key to its rate path outlook. If inflation remains sticky around current levels, a December cut looks less likely. However, if we get a downside surprise next week, particularly in services inflation, the market will likely price in a higher chance of a December cut, leading GBP down lower near-term.
Technical Views
GBPUSD
The sell off in GBPUSD has seen the market breaking down below the 1.2859 level and the local bull trend line. Price is now fast approaching a test of the 1.2546 level support and the bull trend line from 2023 lows. This is a key pivot for bulls to defend or risk a deeper push towards the 1.23 level next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.