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UK Q2 GDP Falls by a Record 20.4% But Signs of a Recovery Appear, GBPUSD Unchanged

UK Q2 GDP Falls by a Record 20.4% But Signs of a Recovery Appear, GBPUSD Unchanged

Nick Cawley, Senior Strategist


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UK Q2 GDP and GBP/USD Price, Chart and Analysis:

  • UK Q2 GDP fell by a record 20.4%, the largest contraction on record.
  • Sterling unchanged on the release as June data points to a pick-up in activity.
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The latest UK GDP data showed that the economy entered into a technical recession as activity slumped across the board. The preliminary Q2 q/q reading fell by a record 20.4%, the largest fall since quarterly records began in 1955. Today’s ONS data shows that the UK economy is now 22.1% smaller than it was at the end of 2019, highlighting the effect the COVID-19 pandemic has had on economic activity.

There was a small ray of light in today’s release with the June monthly reading showing growth of 8.7%, beating estimates of 8.0% as the UK began to unwind lockdown measures.

For all market-moving data releases and events see the DailyFX Economic Calendar

GBP/USD remains little changed post-GDP release and trades just under 1.3050, a level the pair opened up at this week. Short-term support remains around the 1.3000 big figure with 1.2978 a secondary level consisting of the 20-dma and the August low print. The technical golden cross – 50-dma through the 200-dma – still underpins Sterling to a certain extent with Tuesday’s high of 1.3136 the first upside target.

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GBP/USD Daily Price Chart (December 2019 – August 12, 2020)

GBP/USD Bearish
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 4% -11% -1%
Weekly 31% -27% 6%
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What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.