GBP/USD stops further declines ahead of UK GDP
|- GBP/USD seesaws near three-week low after Moody’s cut UK outlook to negative.
- The broad USD strength and market’s cautious mood ahead of the key British data limit pair’s moves.
- The UK GDP, Manufacturing/Industrial Production in the spotlight amid the US holiday.
Although broad US dollar (USD) strength, coupled with the Moody’s cut to UK’s credit outlook, exert downside pressure on the GBP/USD pair, the quote seesaws around 1.2793 while heading into the London open on Monday.
The greenback keeps the latest gain extended as the global investors seek safety amid uncertainty surrounding the US-China trade deal and protests in Hong Kong. Also supporting the USD’s safe-haven demand could be the geopolitical crisis in the Middle East.
At the United Kingdom’s (UK) political front, Chancellor’s failure to justify criticism of the opposition Labour party’s spending plans raise doubts over the Prime Minister (PM) Boris Johnson’s lead in December polls. Also adding to the ruling party’s tension is Scottish National Party’s (SNP) go ahead with the general election campaign.
As a result, the market’s risk-sentiment has been gloomier with most Asian stocks declining more than 1.0% led by Hong Kong’s higher than 2.0% losses.
Given the absence of the United States (US) traders, due to Veterans Day Holiday, markets will look for the British data for fresh impulse. Among them, preliminary reading of the third quarter (Q3) Gross Domestic Product (GDP), coupled with Manufacturing and Industrial Production numbers for September, will be the key.
While the UK GDP is expected to recover to +0.3% from -0.2% on QoQ, the YoY numbers might soften to 1.1% from 1.3%. Further, Manufacturing Production could shrink -0.2% versus -0.7% prior while Industrial Production might improve to -0.1% from -0.6%.
Technical Analysis
An area comprising 21-day Exponential Moving Average (EMA) and June month high around 1.2790/85 becomes important for pair sellers while buyers look for an upside break of 1.2860 for fresh entry.
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