GBP/USD: cable trades higher despite weak data

Traders bought the Pound on Thursday and it was 0.3% stronger during the US session as market participants ignored very weak data from the British economy released earlier in the day.

The monthly GDP reading for August came out below expectations and printed -0.1%, down from 

0.4% previously. Analysts had expected economic growth to slow to 0.0%.

Moreover, the UK industrial production continued to deteriorate to -1.8% (year-on-year) in August, down from -1.1% in September, while manufacturing production slowed further from -0.9% to -1.7%. As previously stated, sterling failed to decline after these numbers and remained bid. 

In addition, Brexit remained in focus after the EU's chief Brexit negotiator Michel Barnier said reaching a deal would be "difficult but possible".

From the technical point of view, the resistance seems to be at around 1.2240, where the bearish trendline from October' highs is located. If the cable jumps above this trend line, the short-term outlook could switch to bullish, but sterling needs to rise above 1.2260 to confirm this. The next target might be at around 1.23.

Alternatively, the support is at 1.22, where previous swing lows are located and if bears push the pound below this zone, stop losses of longs could be hit, which might lead to further decline toward 1.2150.