GBP/USD - Prices, Charts, and Analysis
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The UK economy grew by 4% in 2022, following a 7.6% increase in 2021, but data for the month of December showed the economy contracting by 0.5%, a report released by the ONS showed today. The monthly and Q4 data was roughly in line with analysts’ predictions and while the zero growth seen in Q4 - after a revised 0.2% fall in Q3 - has at least kept the ‘UK in a recession’ headlines at bay, the outlook for the UK economy remains precarious.
Breaking News: UK GDP Data in Line with Estimates, GBP/USD Steady
For all central bank policy decision dates see the DailyFX Central Bank Calendar
With negligible growth on the horizon, next week’s jobs and inflation data will give the next clue as to the current state of the UK economy. Inflation is expected to fall but still remain near a multi-decade high, while the unemployment rate is seen unchanged at 3.7%, just off a multi-decade low.
Bank of England governor Andrew Bailey, and three other MPC members, were in front of the Treasury Select Committee this week. Governor Bailey told the committee that the central bank was still concerned about the persistence of consumer price pressures but said that the BoE projects that inflation will fall below 5% this year. The BoE is expected to hike rates further but may do so in increments of 25 basis points going forward unless data shows inflation staying stubbornly high. Next Wednesday’s CPI print will give the market an updated view of UK inflation.
GBP/USD is pushing back to the 1.2100 area after producing a strong rebound off the 200-day moving average on Tuesday. The 50-dma is now capping further upside, in the short term at least, leaving cable looking for the next driver. This will happen next week from the UK data talked about earlier and the latest look at US inflation on Tuesday. Until then, GBP/USD is set for a short-term period of consolidation.
GBP/USD Daily Price Chart – February 10, 2023
Chart via TradingView
| Change in | Longs | Shorts | OI |
| Daily | -15% | 16% | -6% |
| Weekly | -3% | 0% | -2% |
Retail Traders Little Changed Over the Last Seven Days
Retail trader data show 55.70% of traders are net-long with the ratio of traders long to short at 1.26 to 1.The number of traders net-long is 1.70% higher than yesterday and 3.78% higher from last week, while the number of traders net-short is 1.91% lower than yesterday and 5.23% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.
What is your view on the British Pound – 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.
