Never miss a story from Martin Essex

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Martin Essex

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

GBP price, news and analysis:

  • The ever-decreasing prospect of a UK interest rate hike by the Bank of England is weakening the British Pound following poor economic data.
  • The Bank will likely wait for both an economic pickup and more certainty about Brexit before even considering tightening UK monetary policy.

Sterling undermined by weak UK economy

GBPUSD has dropped below the psychologically important 1.30 level and looks set to weaken further after making a decisive break below the support line of a bearish rising wedge pattern on the daily chart to its lowest level for two weeks.

GBPUSD Price Chart, Daily Timeframe (November 23, 2018 – February 6, 2019)

Latest GBPUSD price chart.

Chart by IG (You can click on it for a larger image)

The Pound has been undermined over the past week by survey data suggesting the UK economy is now spluttering. The purchasing managers’ index for the UK manufacturing sector, released last Friday, showed a fall in January to 52.8 from 54.2 – well below the predicted 53.5.

That lack of momentum was emphasized Monday by a weaker than expected construction PMI and again Tuesday by the service-sector PMI, which showed a drop from 51.2 to 50.1 – below the forecast 51.0, only a whisker above the 50 level separating expansion from contraction and the lowest for 2-1/2 years.

This suggests the Bank of England will be in “wait and see” mode when it makes its next interest-rate decision Thursday and will be in no hurry to raise rates for the rest of this year.

Brexit talks still stalled

As for Brexit, UK Prime Minister Theresa May will visit Brussels Thursday in yet another attempt to reach a deal but no breakthrough is expected and that too will likely prevent a significant recovery in GBP. A poll by the Reuters news agency released Wednesday showed respondents predicting that sterling will gain between 2% and 5% if the UK parts ways with the EU with a divorce deal but will slide between 5% and 10% in the event of a disorderly Brexit.

More to read:

A Beginner’s Guide to the Bank of England

GBP News and Analysis

British Pound: What Every Trader Needs to Know

Resources to help you trade the forex markets:

Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:

--- Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex