GBPUSD Weakens After UK Growth Misses Expectations
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Sterling Talking Points
- UK Q4 growth misses expectations
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GBPUSD Rattled by Weaker-Than-Expected UK Growth.
UK Q4 growth fell to 0.4% from a prior reading and expectations of 0.5%, while annual growth also slipped to 1.4% from 1.5%. UK GDP for 2017 was also downgraded by 0.1% to 1.7%.
Commenting on today’s GDP figures, Head of GDP Darren Morgan wrote:“Services continued to drive growth at the end of 2017, but with a number of consumer-facing industries slowing, as price rises led to household budgets being squeezed.A number of very small revisions to mining, energy generation and services were enough to see a slight downward revision to quarterly growth overall, despite headline services output being unchanged.”
GBP USD continued to slip lower after the release and currently trades below 1.39000. The pair were already under downward pressure after Wednesday’s FOMC minutes revealed a slightly hawkish twist with the Fed now anticipating that “the rate of economic growth in 2018 would exceed their estimates of its sustainable longer-run growth.”
GBPUSD Price Chart 30 Minute Time Frame (February 19 - 22, 2018)
Clients Remain Net-Short of GBPUSD
IG Client Sentiment data show 48.4% of traders are net-long with the ratio of traders short to long at 1.06 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Positioning is less net-short than yesterday and compared to last week. Recent changes in sentiment warn that the current GBPUSD price trend may reverse lower despite the fact that traders remain net-short.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.