GBP/USD stems slide as GDP beats estimate
|- UK GDP flat in third quarter.
The British pound is steady on Friday. In the European session, GBP/USD is trading at 1.2219, down 0.02%. The pound is coming off a nasty four-day slide, in which it declined 1.19%.
GDP flatlines in Q3
Today’s UK’s GDP numbers weren’t pretty, but they managed to beat the forecasts, which has helped the British pound stabilize after a disappointing week. The economy flatlined in the third quarter, below the Q2 reading of 0.2% q/q but higher than the market consensus of -0.1%. Monthly, GDP eked out a gain of 0.2%, versus a revised 0.1% in July and above the market consensus of 0.0%.
The lack of growth in the third quarter is nothing to cheer about, but at least the UK will avoid a recession this year, which is defined as two consecutive quarters of negative growth. High interest rates and stubborn inflation continue to squeeze consumers and businesses, and a sharp drop in house sales has dragged down the services sector. Consumers are in a sour mood due to the cost of living crisis and are expected to cut down on Christmas shopping.
The Bank of England lowered its growth forecast for the fourth quarter at its meeting earlier this month when it kept interest rates unchanged. GDP is expected to rise just 0.1% q/q. Inflation is projected to fall back to the 2% target at the end of 2025, six months later than the previous forecast. Governor Bailey has been stressing that inflation remains too high, but the BoE nevertheless voted to hold rates after 14 straight increases. Another pause at the December meeting would be the central bank’s preferred plan of action, data permitting.
GBP/USD technical
-
There is resistance at 1.2287 and 1.2344.
-
1.2183 and 1.2091 and are providing support.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.