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UK Growth Falls Again
The British Pound has come under fresh selling pressure today following the latest UK economic data this morning. UK GDP was seen contracting 0.1% last month, following an equal decline over the prior month, and well below the 0.1% rise the market was looking for. The biggest downward drag on growth came from production (-0.6%) and construction (-0.4%). Given a second consecutive month of negative growth, recession risks are seen rising, putting pressure on GBP ahead of the upcoming December BOE meeting next week.
BOE Expectations
While GBP is selling off today, expectations are still for the BOE to keep rate son hold next week, though dovish risks are increasing. Indeed, looking ahead there are clear downside risks for the UK given the looming trade war with the US as Trump threatens to go live with planned tariffs next month. The UK is particularly vulnerable given the damage wrought on the UK economy from the post-Brexit fallout. As such, while the BOE might well hold rates steady this month, the accompanying outlook and message is expected to keep the door open to further easing if needed, keeping GBP risks skewed to the downside for now.
Technical Views
GBPUSD
The sell off in GBPUSD has stalled for now into a test of the long-term bull trend line. However, price now looks set to test the trend line again and with momentum studies weakening, risks of a break lower are growing. Below there, 1.2337 is the next support to watch. Bulls need to get back above 1.2832 to alleviate bearish risks.
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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.