Abstract:The British Pound faces major event risk with UK Q2 GDP data due for release Friday which looks to provide the latest health check on the British economy amid prolonged Brexit uncertainty.
GBP PRICE OUTLOOK TURNS TO UK Q2 GDP REPORT
Spot GBPUSD has traded in a narrow range so far this month, but Friday‘s UK Q2 GDP report has potential to reignite the currency pair’s slide lower
The British Pound Sterling and UK economy activity remains subdued by prolonged Brexit uncertainty
GBPUSD currency traders are gearing up for heightened price action in the Pound Sterling with the UK Q2 GDP report on deck for release Friday at 8:30 GMT. The British economy is expected to grow at a year-over-year annual rate of 1.4% - a modest decline from the 1.8% figure printed in the first quarter.
UK QUARTERLY GDP (YEAR-OVER-YEAR)
UK GDP growth has been on a steady decline and is not likely to return to post-recession highs any time soon with Brexit uncertainty weighing negatively on consumption, business confidence and investment. Also, with new PM Boris Johnson now at the helm of UK Parliament – a Brexit hardliner – the impact of heightened fears over no-deal Brexit could begin to show signs in the UK Q2 GDP report.
While there may be evidence of further inventory stockpiling which boosts economic output, which was the case found in the Q1 GDP report, this development is expected to serve as a headwind to GDP growth going forward. Yet, the British economy has remained quite resilient on balance all else considering.
GBPUSD PRICE CHART: DAILY TIME FRAME (APRIL 15, 2019 TO AUGUST 08, 2019)
GBPUSD price action is expected to maintain a downward bias, however, considering the dominant headwind of no-deal Brexit risk even if tomorrow‘s UK GDP report provides a positive sign for the economy. That said, spot GBPUSD might be expected to trade between 1.2083-1.2189 with a 68% statistical probability judging by the currency pair’s overnight implied volatility reading of 8.37%.
SPOT GBPUSD & IG CLIENT SENTIMENT INDEX PRICE CHART: DAILY TIME FRAME (FEBRUARY 11, 2019 TO AUGUST 08, 2019)
According to IG Client Sentiment data, 77.2% of GBPUSD retail forex traders are net-long resulting in a long-to-short ratio of 3.39 to 1. Traders have remained net long since 06 May when the cable traded near 1.2981; spot GBPUSD has moved 6.4% lower since then. Furthermore, the number of traders net long is 5.6% lower than last week while the number of traders net-short is 1.7% higher than last week. Seeing that we typically take a contrarian view to crowd sentiment, spot GBPUSD could continue to drift lower.
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A week of consolidation Ahead amid renewed USD strength
GBP/USD Technical Analysis - the pair has bounced back after making a new low for the year. The Pound has seen increased volatility as it looks to hold ground. Will Sterling continue to be undermined and make fresh lows again?
The start of November has been a dwindling moment for the general major currency market. As essential economic updates flood the surface of the entire foreign exchange market, in which most of the currency pairs especially the major pairs were greatly affected by the impact of the economic releases. However, the US dollar was discovered to have held the main currency exchange performance metrics as the central economic updates from the US region tend to have determined the significant changes that have occurred in the major currency market so far.
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