Jump to content

UK Economy Surpasses Pre-Pandemic Levels: Nov GDP + 0.9%


Recommended Posts

UK GDP, GBP/USD ANALYSIS:

  • UK economy rose 0.9% in November, taking the economy past pre-pandemic levels
  • Omicron and ‘Plan B’ could dampen the mood with lower expected GDP in Dec & Jan
  • Key GBP/USD technical levels analyzed alongside IG Client Sentiment data
UK Economy Surpasses Pre-Pandemic Levels: Nov GDP + 0.9%

NOVEMBER GDP SURPASSES EXPECTATIONS

The British economy grew by 0.9% in November propelling the overall size of the economy to 0.7% above the pre-pandemic level. In fact, the UK economy was 8% larger than November 2020.

UK november GDP

Source: DailyFX economic calendar

The positive data further supports market expectations of another Bank of England (BoE) rate hike in February. Currently rate markets have priced in a 75% chance of a hike from 0.25% to 0.5% when the group is due to meet on the 3rd of February. However, with the emergence of the Omicron variant and subsequent restrictions imposed via ‘Plan B’, lower levels of economic activity may surface for December and January which could result in a sudden repricing of the expected rate hike – similar to what we saw after the BoE’s decision not to hike rates in November last year.

KEY TECHNICAL LEVELS (GBP/USD)

The Pound Sterling continues its impressive bull run after breaking above the trendline support which stems from the 2021 high. Tuesday this week was when we saw the pair trade above the trendline but Wednesday provided the momentum needed to confirm the renewed bullish intent, as the post CPI dollar sell-off boosted GBP/USD.

The dollar decline, positive GDP figures and increasing talk of another rate hike next month has helped support Sterling at current levels. A bullish continuation highlights the 1.3780 and 1.3835 levels of resistance.

However, risks to the downside have emerged as the pair continues to trade in overbought territory (RSI) and the dollar - via proxy in the US dollar basket (DXY) – attempts to stop the recent spate of selling as it trades flat in the early hours of the London session. Nearest support remains the 1.3675 level with trendline support the next relevant level to watch before 1.3515 comes into focus.

GBP/USD Daily Chart

Daily GBP/USD chart

Chart prepared by Richard Snow, IG

 

CLIENT SENTIMENT FAVORS BULLISH CONTINUATION

Retail trader data shows 38.09% of traders are net-long with the ratio of traders short to long at 1.63 to 1.

GBP/USD sentiment

  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBP/USD prices may continue to rise.
  • The number of traders net-long is 0.62% higher than yesterday and 15.53% lower from last week, while the number of traders net-short is 1.42% higher than yesterday and 33.53% higher from last week.
  • Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bullish contrarian trading bias.
 
image.png
 
Written by Richard Snow for DailyFX.com. 14th Jan 2022.
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      19,996
    • Total Posts
      87,966
    • Total Members
      69,148
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    Ammanuel10
    Joined 26/09/22 07:04
  • Posts

    • Pepsico Inc., Elliott Wave Technical Analysis Pepsico Inc.,(PEP:NASDAQ): Daily Chart,September 26 2022,  PEPStock Market Analysis:It has moved as predicted from the last forecast. However as I cannot see five waves from the last move to the upside, I have reasons to believe we will get another corrective leg. PEP Elliott Wave count:  {b} of 2. PEPTrading Strategy:Looking for short off the end of wave (c) of {b}. PEPTechnical Indicators:200EMA acting as support. TradingLounge Analyst: Alessio Barretta Source: Tradinglounge.com Get Trial Here!       Pepsico Inc.,PEP: 4-hour Chart,September 26 2022 Pepsico Inc.,Elliott Wave Technical Analysis PEP Stock Market Analysis: Looking for wave (c) to reach the point of control up where wave (b) of {a} is. PEPElliott Wave count: (b) of {b} PEP Technical Indicators:The EMAs are crossing, which is often times a sign of reversal. PEPTrading Strategy: Looking for a short term long to trade wave (c) of {b}.
    • For more up to date news on how markets will open, the latest earnings and economic news, watch IGTV live in the platform at 07:30am UK. Today’s coverage:   Indices: Europe expected to open mixed after the Dax and CAC hit a new low for the year on Friday. FTSE100 up as weak GBP benefits exporters. Asia down overnight FX: GBP in the mire, record low (since decimalisation) vs USD but down across the board Equities: none to speak of today as it’s all about the sell-off and GBP etc Commods: Gold lowest since April 2020 (at a record high vs GBP). Oil near low for the year. Lumber 28mth lows      
    • Commodity Futures Market Summary: Elliott Wave Trading Strategies; US Gov Bonds 10 Yr Yields, US Dollar Index DXY, US Spot Gold, GDX, Silver, Copper, XLE Energy ETF, Crude Oil and Natural Gas Market Summary: Stronger Dollar index weaker FX pairs and commodities. Shorting Gold stocks seems one of the better moves. Expect all metals and energy markets lower  Video Chapters 00:00 US Gov Bonds 10 Yr Yields 08:04 US Dollar Index DXY  13:58 GDX ETF /  US Spot Gold 15:44 US Spot Silver 17:20 US Copper / Lithium / Uranium / Nickel 25:20 Crude Oil. Sector XLE / XOM 34:42 Natural Gas 48:44 Thanks for supporting! Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com    
×
×
  • Create New...