You are here: Home > articles > Forex > GBP/USD: Weak UK GDP to help USD regain momentum? June 12, 2019
GBP/USD: Weak UK GDP to help USD regain momentum? June 12, 2019
June 12, 2019 12:21 pmVideo
Latest News
- Trading Signals for EUR/USD for May 3-5, 2024: sell below 1.0803 (overbought – 5/8 Murray) May 3, 2024
- Trading Signals for GOLD for May 3-5, 2024: sell below $2,320 or below $2,300 (21 SMA – 200 EMA) May 3, 2024
- Technical Analysis – GBPUSD advances above descending trendline May 3, 2024
- USD experiences day X May 3, 2024
- Bitcoin licks wounds as Fed comes on the rescue – Crypto News May 3, 2024
- GBP/USD: trading plan for the US session on May 3rd (analysis of morning deals). The pound is preparing to get out of the May 3, 2024
- EUR and GBP may drop May 3, 2024
- EUR/USD: trading plan for the US session on May 3rd (analysis of morning deals). US data will be the key moment of the week May 3, 2024
- USD/JPY: Simple trading tips for novice traders for May 3rd (US session) May 3, 2024
- GBP/USD: Simple trading tips for novice traders for May 3rd (US session) May 3, 2024
- Video market update for May 03, 2024 May 3, 2024
- EUR/USD: Simple trading tips for novice traders on May 3rd (US session) May 3, 2024
- Could the BoE adopt a more dovish stance on Thursday? – Preview May 3, 2024
- EUR/USD. May 3rd. Bulls don’t give up without a fight May 3, 2024
- GBP/USD. May 3rd. Bears are counting on a strong US labor market May 3, 2024
- Market Comment – Stocks enjoy Fed-induced bounce as dollar slips ahead of NFP May 3, 2024
- Weekly Forex Outlook: 03/05/2024 – BoE and RBA decisions headline a calm week May 3, 2024
- Week Ahead – BoE and RBA decisions headline a calm week May 3, 2024
- USD/JPY: trading tips for beginners for European session on May 3 May 3, 2024
- GBP/USD: trading tips for beginners for European session on May 3 May 3, 2024
GBP managed to gain momentum and sustain it quite well over USD recently. After impulsive bearish pressure, the price is making pullbacks.
Due to contraction in the UK GDP and a slowdown in the manufacturing sector, GBP is expected to lose momentum in the coming days. Bank of England official Gertjan Vlieghe recently stated that risks to the economy had deteriorated since the British central bank published its most recent forecasts in May and worse-than-expected economic data made the UK economy lose momentum. Mr. Vileghe expressed hopes that the UK economy would gather speed despite global trade tensions and continued uncertainty about Brexit.
On the Brexit front, there are still concerns that leaving the European Union on Oct. 31 without any transition deal would be a major economic shock. So, businesses would be unable to prepare for the long-term consequences. Recently Saunders from Monetary Policy Committee stated that there are possibility of interest rates going either way, due to the risk of a weaker pound and a major shock to Britain’s supply capacity that would spur inflation. However, financial markets reckon that the BoE is more likely to cut rates to support economic growth after a disruptive no-deal Brexit.
Recently, UK Average Cash Earnings report presented a better than expected value of 3.1% versus 3.3% in the previous month. But Claimant Count Change report was published with a negative result of an increase to 23.2k from the previous figure of 19.1k which was expected to decline to 12.3k. Bank of England’s Governor Carney is going to speak on Friday. His speech is expected to make a good impact on the upcoming momentum of GBP.
On the USD side, the US is due to release a retail sales report on Friday. Analysts have optimistic expectation, so retail sales could have risen to 0.7% from -0.2%. If the forecast comes true, USD could regain momentum over GBP at the end of the week. Recently US PPI report was published with a decrease to 0.1% as expected from the previous value of 0.2% but IBD/TIPP Economic Optimism dropped to 53.2 from the previous figure of 58.6 which was expected to grow to 59.2.
There are three weeks to go before US and China’s leaders meet for the trade talks. Investors have low expectations for progress toward ending the trade war. The parties have made little preparation for a meeting even under the conditions that the health of the world economy is at stake. US President Donald Trump recently defended the use of tariffs as part of his trade strategy while China pleged to make a tough response if the United States insists on escalating trade tensions. Moreover, President Trump is again taking a dig on Federal Reserve’s monetary policy which he believes is to blame for the lack of economic progress in the US.
To sum it up, the UK discouraged investors with weak GDP, thus causing negative market sentiment on GBP. The upcoming economic reports from the US will show whether USD can regain and maintain the momentum over GBP.
Now let us look at the technical view. The price is currently trading inside the corrective resistance range between 1.2700-50 from where it has greater probability to move lower following the overall bearish trend. The price is currently being held by 20 EMA as resistance. Confluence to the overall price action bearish context is expected to push the price lower towards 1.2500 support area in the coming days as the price remains below 1.30 area with a daily close.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: