GBP remains on the defensive as a result of dismal GDP figures. Faces challenges as a result of several challenges in the near future

Key Points & considerations

The British pound is under strain owing to a number of factors.

The United Kingdom’s economy stayed unchanged in the third quarter, despite forecasters forecasting a 0.1 percent drop.

Due to increasing rates of borrowing, corporate investment in the United Kingdom declined considerably in the third quarter.

GBP Reaction impact, post Powell speech

Illusration Source: TradingView

Jerome Powell, the chairman of the US Fed, was not in a good frame of mind to contemplate interest rate reduction. Reiterating in a planned address that interest rates could have to increase anew.

The Sterling is projected to extend its negative run for a 5th day of trading as traders predict a major downturn in the UK economy. The UK economy avoided reduction in growth in Q3 of 2023. Although stayed sluggish as employers were hesitant to recruit job applicants on a long-term basis. Also, the plant growth targets were shelved owing to a dismal demand forecast. Rising rates of interest by the BoE and persistent price inflation have strained family finances. Following the announcement of the third quarter GDP, British Chancellor Hunt said rising inflation represents the single largest impediment to growth in the economy.

In addition to the economic instability, the pound’s value is being weighed down by softer projections. Regarding the future interest rate prospects from the Bank of England officials and gloomy sentiment among traders. Given concerns about an extreme downturn. The Bank of England economist Huw Pill stated rate reduction in the middle-2024 “just doesn’t sound entirely unrealistic.” The market’s sentiment soured when the US central bank Chairman Powell stated that the present rates are insufficient to reduce inflation to 2 percent.

Technical Perspective

The https://voiceoftraders.com/analysis/gbp-is-anticipated-to-gain-additional-ground-in-near-term The GBP is trading around the breakaway zone of a symmetric triangle charting formation established on a daily timescale. The GBPUSD duo is trading near the 20-(D-EMA), located at 1.2230. The pound wider appeal is negative, since the 200-(D_EMA) started to slant southward.

Support & Resistance levels

S3 1.20368  S2 1.20368  S1 1.20689      R1 1.24281  R2 1.25479  R3 1.31418