Jump to content

GBP/USD Forecast: UK Growth Slowing, GBP Risks Remain Lower


Recommended Posts

GBP/USD PRICE ANALYSIS & NEWS

  • UK GDP Contracts In March
  • GBP/USD Risks Remain Lower

Forex - GBP/USD hits 2-month high as dollar comes under pressure By  Investing.com

UK Q1 GDP RECAP

UK GDP Q4 Q/Q: 0.8% vs Exp. 1.0% (Prior 1.0%) Mar M/M: -0.1% vs Exp. 0.0% (Prior 0.1%)

UK GDP for the first quarter came in below expectations across the board, with the quarterly figure rising 0.8% (Exp. 1.0%). While the March reading showed a surprise contraction of 0.1%. Given last week’s Bank of England monetary policy report, this further compounds their view that growth will materially slow down throughout the year, highlighting the stagflation risks that the UK economy is facing. What’s more, with the cost of living squeeze now more prominent, growth will take a bigger hit in Q2. In reaction to the data, the Pound saw a marginal drop, dipping below the 1.2200 handle before quickly retracing. However, with risk appetite remaining sour, the path of least resistance is lower GBP.

On the technical front, there is little in the way of support until 1.2073 (May 2020) with the 1.2000 handle below. Meanwhile, resistance resides at 1.2400. The bias remains to fade on rallies for GBP/USD. Elsewhere, upside risks remain for EUR/GBP as ECB Officials talk up the potential for a July rate rise. As well as the fact that the Pound has a higher beta to equity markets, making the currency more vulnerable when equities sell-off.

GBP/USD CHART: DAILY TIME FRAME

GBPUSD daily chart

Source: Refinitiv

 

May 12, 2022 | DailyFX
Justin McQueen, Strategist

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
  • image.png

  • Posts

    • The recent controversy surrounding Kucoin executives reignites the debate on the regulation of centralized exchanges. Many argue that without proper oversight, preventing fraud on these platforms becomes exceedingly difficult. While some may resist government intervention, the persistence of fraudulent activities prompts us to question how long we can turn a blind eye. Despite reservations about figures like Gary Gensler, it's crucial to recognize the potential benefits of regulatory bodies like the SEC. The specter of another FTX-like incident looms large, with potential market ramifications given Kucoin's size. The recent sentencing of SBF, the former FTX founder, to 25 years in prison, serves as a stark reminder of the necessity for regulatory action to ensure long-term transparency and accountability. While decentralized exchanges offer an alternative, they are not without their own risks. This underscores the case for comprehensive regulation. However, recent events, such as the Nigerian government's request for user data from Binance, raise legitimate concerns about user privacy and governmental overreach. Can exchanges operate without incident for decades? Can we build a future where users feel genuinely confident and secure in their transactions? These are pressing questions that demand thoughtful consideration as we navigate the ever-evolving landscape of crypto exchanges.
    • I've developed an initial version of a market sentiment checker, which utilizes the concept of weighted log returns to gauge the mood of the financial markets. This tool is designed to simplify the complex task of assessing market sentiment by analyzing fluctuations in price data. By applying weights to log returns, it emphasizes the significance of certain data points over others, offering a more nuanced view of market dynamics. This approach allows for a fundamental analysis of market sentiment and provides insights into the current state of the market at any given moment. It serves as a valuable tool for investors and traders looking to make informed decisions based on the underlying sentiment driving market movements. sentiment-sleuth - Github Link
    • Demo account: Please note that conditions on demo accounts may differ from real accounts. Some brokers may only provide overnight loans on real accounts and not on demo accounts.
×
×
  • Create New...
us