GBP/USD shrugs as UK GDP unexpectedly declines

Kenny Fisher MarketPulse

The British pound has edged lower against the US dollar on Friday. GBP/USD is trading at 1.2928 in the European session, down 0.13% on the day.

UK economy declines 0.1% in January

The UK economy barely registered any growth in the second half of 2024, rising 0.1% in the third quarter and flatlining in the third quarter. The New Year hasn’t seen any improvement, as GDP contracted 0.1% m/m in January, after a 0.4% gain in December and missing the market estimate of 0.1%. The surprise contraction was driven by declines in the production and manufacturing sectors. The economy expanded 0.2% in the three months to January, up from 0.1% in the three months to December but shy of the market estimate of 0.3%.

The weak GDP report won’t make things any easier for Finance Minister Rachel Reeves, who will announce the Treasury’s “Spring Statement” on March 26. Reeves is expected to outline plans for higher taxes and spending cuts. The tax hikes on British businesses are expected to weigh on investment, hiring and growth.

The Bank of England meets on March 20 and is widely expected to maintain rates at 4.5%. The BoE trimmed rates by a quarter-point in February. Inflation rose sharply in January to 3.0% y/y, up from 2.5% in December. The rise in inflation and weak GDP has raised concerns about stagflation, which is characterized by persistent inflation and weak growth.

Another headache for BoE policymakers is US President Donald Trump’s tariff policy. The UK had hoped to avoid the tariffs, but this week the US slapped 25% tariffs on all steel and aluminum imports, including on UK products. That could hurt UK growth and boost inflation.

GBP/USD technical

GBP/USD tested resistance at 1.2949 earlier. Above, there is resistance at 1.2978.
1.2923 and 1.2894 are the next support levels.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD holds lower ground near 1.1850 ahead of EU/ US data

EUR/USD remains in the negative territory for the fourth successive session, trading around 1.1850 in European trading on Friday. A broadly cautious market environment paired with modest US Dollar demand undermines the pair ahead of the Eurozone GDP second estimate and the critical US CPI data.

GBP/USD keeps losses around 1.3600, awaits US CPI for fresh impetus

GBP/USD holds moderate losses at around 1.3600 in the European session on Friday, though it lacks bearish conviction. The US Dollar remains supported amid softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold trims intraday gains to $5,000 as US inflation data loom

Gold retreats from the vicinity of the $5,000 psychological mark, though sticks to its modest intraday gains heading into the European session. Traders now look forward to the release of the US consumer inflation figures for more cues about the Fed policy path. The outlook will play a key role in influencing the near-term US Dollar price dynamics and provide some meaningful impetus to the non-yielding bullion.

US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Solana Price Forecast: Mixed market sentiment caps recovery

Solana (SOL) is trading at $79 as of Friday, following a correction of over 9% so far this week. On-chain and derivatives data indicates mixed sentiment among traders, further limiting the chances of a price recovery.