Pound Under Pressure
GBP has come under heavy selling pressure on Friday in response to weaker-than-forecast economic data out of the UK today. GDP was seen at -0.1% last month, while a slight improvement on the prior month’s -0.3% print, the reading was weaker than the 0.1% the market was looking for. Marking the second consecutive month in negative territory, the data has raised serious concerns over the health of the UK economy.
BOE Easing Expectations
On the back of the data, BOE easing expectations have been brought back into focus leading to the current selling we’re seeing in GBPUSD, as traders start to price in a higher likelihood of a further cut in August. Market expectations have been fluctuating recently as a result of stickiness in UK inflation data. Looking ahead, focus will now be on the upcoming June CPI release. Provided we don’t see any fresh strength in inflation readings, today’s data (and recent weak labour market data) point to the BOE likely cutting again next month, meaning GBPUSD should continue lower near-term. Indeed, if June CPI surprises to the downside, this will be seen by traders as a green light for further BOE easing, weighing heavily on GBP into the August meeting.
Technical Views
GBPUSD
The rally in GBPUSD has stalled for now with price reversing back under the 1.3638 level, now testing support at 1.3515. The bull channel lows and 1.3436 level will be the key support to watch. If broken, there is room for a deeper push down towards 1.3258 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.