GBP/USD Keeps Its Head Below 1.7000 Despite Consensus UK GDP Figures
- UK GDP (QoQ) (2Q A): 0.8% Actual Vs 0.8% Estimated; 0.8% Prior.
- UK GDP (YoY) (2Q A):3.1% Actual Vs 3.1% Estimated; 3.0% Prior.
- GBP/USD snaps 7-day Losing Streak After UK GDP Figures
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UK 2Q Gross Domestic Product (GDP) came in at 3.1 percent year-on-year, which matched market expectations. An indicator for broad overall growth in the United Kingdom for the quarter registered at 0.8 percent against the consensus forecast of 0.8 percent. The ongoing improvement in the labor market along with the expansion in the UK housing market may have been some of the catalysts for a continued acceleration in UK’s ongoing growth says DailyFX Currency Analyst David Song.
This economic event is considered, by Chief Currency Strategist John Kicklighter, as a “high-level potential market mover’ as it holds heavy correlation with the Bank of England’s rate expectations. An acceleration in GDP-growth is expected to increase inflationary pressures which may lead to monetary policy tightening.
Before the release of the GDP figures, GBP/USD recouped some of its losses earlier in the session but stayed discouragingly below the critical 1.7000 mark. Straight after the release the British Pound shot up against the US Dollar to put an end to a potential 8-day losing streak for GBP/USD.
For those thinking about technical levels, DailyFX Currency Strategist Ilya Spivak indicates near-term support to rest at 1.6969 (23.6% Fib Ret.) and resistance at 1.7053-62 (14.6% Fib Ret.). He remains on the sidelines as entering short with prices trading in close proximity to support level is not enticing from a risk/reward perspective. Also, the absence of a defined bullish reversal signal argues against going long. Meanwhile according to DailyFX Speculative Sentiment Index, 60 percent of retail Forex traders are short the GBP/USD.
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Edward Hyon, DailyFX Research Team
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