GBP/USD Pushes Lower After UK GDP Data, Holds On To Weekly Gains
The GBP/USD pair fell further on Friday, facing renewed bearish pressure by the end of the week as investors lost interest in the sterling after UK GDP data and the dollar strengthened fueled by consumer confidence data.
At the time of writing, the GBP/USD pair trades at the 1.2140 area, with 0.46% lower on the day and posting its second daily loss in a row.
The UK Office for National Statistics (ONS) revealed that the British economy contracted by 0.1% during Q2 but expanded at an annualized rate of 2.9%. Despite the data coming in slightly better than the market's consensus of -0.2% and 2.8%, respectively, the British pound failed to attract investors as a recession is a foregone conclusion.
The Bank of England (BoE) has forecasted a recession starting in Q4 that will last five quarters while it plans to continue tightening policy rate to control inflation. The swaps markets are pricing 150 bps hikes over the next 12 months that would locate the policy rate at 3.25%.
Across the pond, the Michigan Consumer Sentiment Index came in at 55.1, up from 51.5 the previous month and higher than the market's expectations of 52.5.
The US dollar, measured by the DXY index, received a boost from confidence data. The DXY got some traction and snapped a four-day losing streak. The index is currently trading around 105.70, 0.6% above its opening price.
The GBP/USD is poised to close the week with gains, but the technical outlook remains bearish as the pair keeps printing lower highs and the candles suggest a weak bullish momentum on the weekly chart.
The negative bias is not present on the daily chart yet, as the pair holds above the key 20-day SMA, and consolidation above would help the bulls gather momentum. The daily RSI has gained a significant negative slope but remains above its midline, while the MACD printed a lower green bar, indicating decreasing buying interest.
On the downside, the 20-day SMA, currently at 1.2096, offers solid support. However, loss of the latter could expose a re-test of the 1.2000 level. On the other hand, resistance levels are seen at 1.2250, followed by the 1.2300 level and the 1.2350 area.
At the time of writing, the GBP/USD pair trades at the 1.2140 area, with 0.46% lower on the day and posting its second daily loss in a row.
The UK Office for National Statistics (ONS) revealed that the British economy contracted by 0.1% during Q2 but expanded at an annualized rate of 2.9%. Despite the data coming in slightly better than the market's consensus of -0.2% and 2.8%, respectively, the British pound failed to attract investors as a recession is a foregone conclusion.
The Bank of England (BoE) has forecasted a recession starting in Q4 that will last five quarters while it plans to continue tightening policy rate to control inflation. The swaps markets are pricing 150 bps hikes over the next 12 months that would locate the policy rate at 3.25%.
Across the pond, the Michigan Consumer Sentiment Index came in at 55.1, up from 51.5 the previous month and higher than the market's expectations of 52.5.
The US dollar, measured by the DXY index, received a boost from confidence data. The DXY got some traction and snapped a four-day losing streak. The index is currently trading around 105.70, 0.6% above its opening price.
The GBP/USD is poised to close the week with gains, but the technical outlook remains bearish as the pair keeps printing lower highs and the candles suggest a weak bullish momentum on the weekly chart.
The negative bias is not present on the daily chart yet, as the pair holds above the key 20-day SMA, and consolidation above would help the bulls gather momentum. The daily RSI has gained a significant negative slope but remains above its midline, while the MACD printed a lower green bar, indicating decreasing buying interest.
On the downside, the 20-day SMA, currently at 1.2096, offers solid support. However, loss of the latter could expose a re-test of the 1.2000 level. On the other hand, resistance levels are seen at 1.2250, followed by the 1.2300 level and the 1.2350 area.