British Pound Latest: GBPUSD Pushing Higher on US Dollar Weakness

GBPUSD - Prices, Charts, and Analysis

• The outlook for UK growth remains bleak.
• BoE is worried that UK inflation will remain stubbornly high.

Anemic growth and persistent inflation will continue to damage UK households this year, according to the latest National Institute of Economic and Social Research (NIESR) blog. The NIESR expects the official UK Q4 GDP – released tomorrow at 07:00 GMT - to show minimal to zero economic expansion, while UK growth is likely to remain at, or close to zero through 2023. And the bad news doesn’t stop this year.

‘The current monetary policy tightening cycle has been aggressive in terms of the pace and magnitude of rate hikes and, given the lags in monetary policy transmission, will likely bear down on output and growth in 2024. But the annual inflation rates we’ve seen throughout the course of 2022 have made this a necessity.’

For all real-time economic data and releases, see the DailyFX Calendar

Bank of England governor Andrew Bailey is joined by MPC members, Huw Pill, Professor Silvana Tenreyro and Professor Jonathan Haskel at the Treasury Select Committee (TSC) today. They have been questioned so far over whether the central bank has been behind the curve in tackling inflation. Comments so far from the BoE representatives suggest that the MPC is still worried about persistently high inflation and that the UK economy may see an extended period of weakness.

Cable is back above 1.2100, boosted by a slightly stronger Sterling and a weaker US dollar. GBPUSD fell below 1.2000 on Tuesday before reversing higher off the 200-day moving average. The next level of resistance is seen around 1.2200 (50-dma) before 1.2292 comes back into view.

GBPUSD Daily Price Chart – February 9, 2023

Charts via TradingView

Retail Trader Ramp up Their Long Positions

Retail trader data show 57.77% of traders are net-long with the ratio of traders long to short at 1.37 to 1.The number of traders net-long is 3.65% lower than yesterday and 45.78% higher from last week, while the number of traders net-short is 7.67% higher than yesterday and 23.56% 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. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBPUSD 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.