GBP/USD approaches 1.2500, weighed by gloomy UK data
- The Pound extends its reversal and hits lows near 1.2500
- UK GDP and Industrial production deteriorate beyond expectations.
- All eyes are now on the Fed, which might boost USD volatility later today.
The Sterling is giving away previous gains on Wednesday, as a string of downbeat UK macroeconomic releases have boosted concerns about the country’s economic outlook.
National Statistics data has revealed that the UK economy contracted at 0.3% in October, well beyond the -0.1% expected, and following a 0.2% growth in September.
Beyond that, manufacturing production dropped 1.1%, against market expectations of a flat performance, driving industrial output 0.8% down instead of the 0.1% decline forecasted by the experts.
Weak UK data poses a challenge to the BoE
These figures offset the positive impact after Tuesday’s strong employment report and pose a headache for the BoE ahead of Thursday’s monetary policy decision.
Later today, the Fed is expected to leave its benchmark rate unchanged at the 5.25% - 5.5% band. The market will be attentive to the dot plot and Chairman Powell’s comments about the bank’s next policy steps, which might boost USD volatility.
Technical levels to watch
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
