GBP is weakening as the employment sector loses jobs and industry activity declines. Following yesterday’s employment data, the UK GDP adds to the GBP’s woes.
Current GBPUSD Trading Pricing
1.24701
GBP Fundamental Review – GBP vs USD
The UK pound will be cautious as it failed on the monthly and three-month median & the YTD figures. The mo to mo report is somewhat shocking, since the GDP declined by 0.5 percent (the fastest rate in seven- months!). Rather than the 0.2 percent forecast. Although some optimistic trade and manufacturing balance numbers, the British economy appears to be declining. Contrary to the previous reading. Higher interest rates are plainly hurting on economic development. Tuesday’s UK employment data indicated modest fragility, that has added to present-day post-GDP decline.
GBP Key Points
As UK industry activity declined drastically, the British pound garnered large bids.
Job cuts in the UK job market, increased wage increases, and sluggish manufacturing activity exacerbate regulators’ concerns.
Breeden of the Bank of England cautioned that inflationary risks have swung to the higher.
The (GBP) stayed available on Wednesday to be the UK’s Office for National Statistics (ONS). Announced that the economy’s output fell by 0.5 percent in July. With manufacturing activity contracting sharply due to a weakening consumption picture. The sterling dollar pair had a sharp fall as the (BoE) raised rates of interest. Causing a downturn in the economy and corporations to stay wary of fuller-capacity efficiency.
Following large redundancies and sluggish manufacturing activity in July. It has become obvious that the United Kingdom’s economy is struggling to bear the strain of tight monetary policies. At this point, robust wage growth has increased inflationary concerns. Necessitating further interest rate rises from the Bank of England in order to manage the sharpest inflation amongst G7 nations. Sarah Breeden, she will succeed Jon Cunliffe as the deputy governor of the Bank of England in the month of November. Identically said that the risks of inflation are tilted to the upward.
The GBP Technical Analysis
As UK economic activity stayed weak in July, the British pound strikes an almost 3-month bottom near 1.2450. The Pound is experiencing a severe sell-off scenario and is vulnerable to further declines. The biggest transactions are located 1.2500 beneath the 200-day (EMA). Both the 20- and 50-day EMAs are trending downwards. Signifying a negative pattern, while momentum indicators show vigor in the negative thrust.
Perspective
If we’re correct in our prediction of an ECB rate increase on Thursday, EURGBP might rise around 0.8670 level. Considering our preference for an upbeat Greenback in the medium term, we predict GBPUSD to test the 200-Day MA around 1.2430zone.
