British Pound trades with caution ahead of UK monthly GDP data

The British Pound faces slight selling pressure ahead of the UK's monthly GDP data for April.
The UK economy is expected to have contracted 0.1% in April.
Fears of US-Iran ceasefire collapse have improved demand for safe-haven assets.

Sagar Dua FXStreet

The British Pound (GBP) trades cautiously against its major currency peers during the European trading session on Thursday, down 0.1% to near 1.3350 against the US Dollar (USD). The British currency is marginally down ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for April, which will be released on Friday.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.04%	0.06%	-0.02%	0.27%	0.11%	0.21%	-0.05%
EUR	-0.04%		0.02%	-0.06%	0.22%	-0.03%	0.19%	-0.09%
GBP	-0.06%	-0.02%		-0.06%	0.18%	-0.06%	0.17%	-0.11%
JPY	0.02%	0.06%	0.06%		0.28%	0.02%	0.23%	-0.02%
CAD	-0.27%	-0.22%	-0.18%	-0.28%		-0.25%	-0.02%	-0.32%
AUD	-0.11%	0.03%	0.06%	-0.02%	0.25%		0.22%	-0.08%
NZD	-0.21%	-0.19%	-0.17%	-0.23%	0.02%	-0.22%		-0.28%
CHF	0.05%	0.09%	0.11%	0.02%	0.32%	0.08%	0.28%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

The Office for National Statistics (ONS) is expected to report that the GDP growth contracted by 0.1% after expanding 0.3% in March. The scenario of UK economic contraction would undermine expectations of Bank of England (BoE) interest rate hikes despite inflationary pressures remaining higher in the wake of elevated energy prices.

On Friday, investors will also focus on the Manufacturing and Industrial Production data for April, which are expected to have remained mixed. Month-on-Month Industrial Production is estimated to have grown by 0.1% after declining 0.2% in April. In the same period, the Manufacturing Production is seen contracting at a 0.2% pace.

Meanwhile, fears of the United States (US)-Iran ceasefire collapse have also dampened the appeal of riskier currencies, resulting in an improvement in the US Dollar’s safe-haven demand. In the European trade, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has turned slightly positive to near 100.12 after recovering early losses.

Investors doubt the US-Iran ceasefire would last long, following attacks traded between both nations in the past few days. However, US President Donald Trump has stated that military operations conducted by Washington were a response to Tehran for shooting down the US Apache helicopter, and not a restart of an all-out war, the Wall Street Journal (WSJ) reported.

Next week, the British Pound will be facing high volatility due to a UK data-packed week and the BoE monetary policy announcement.

Economic Indicator

Gross Domestic Product (MoM)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

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