Market Overview

GBP/USD Forecast: Sterling Unmoved By The UK Manufacturing Output Falling Into Negative

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  • Sterling is trading higher against the US Dollar after the UK monthly GDP saw the UK economy rising 0.3 percent m/m, beating the market expectations.
  • The UK manufacturing output fell -0.2 percent in July, missing the expectations of 0.2 percent rise, while UK trade deficit came out better than expected reaching £2.8 billion in July.
  • Brexit headlines are set to be the greatest Sterling influencers.

Sterling is trading little changed on the upside before the Office for National Statistics released the UK manufacturing output, trade balance and the monthly GDP report on Monday.

While the UK manufacturing output saw production falling-0.2 percent in July, falling short of the market expectations, the monthly UK GDP increased 0.3 percent over the month in July, slightly better than expected.

At the same time the UK trade balance reached a deficit of -£2.8 billion in July, after deficit of -£2.856 billion in June.

Sterling was trading strongly up on Friday last week after the EU chief negotiator Michel Barnier said he is open to any discussion on the hot issue of the Irish border while confirming that about 90 percent of the Brexit deal issues have already been sorted out between the EU and the UK. Barnier’s announcement pushed Sterling above 1.3020 level after Sterling suffered a dip to 1.2785 earlier last week.

The GBP/USD was hit hard with the strength of the US labor market that saw the number of new jobs opened in August surging to 201K in August and more importantly the US wages rising by 2.9 percent y/y. Sterling fell toward 1.2910 level and remained stagnant near that level at the open of the second week of September.

Technically, the GBP/USD is supported by 1.2900 round big figure that matches the 38.2 percent Fibonacci retracement of the upmove on GBP/USD starting at 1.2025 at the beginning of January of 2017 and peaking on April 17 this year at 1.4377. Should the GBP/USD break the 1.2900 on the downside, last week’s psychological support at 1.2800 becomes an immediate target. On the upside, the immediate target is 1.2970, the cyclical peak from Thursday last week before 1.3000 and 1.3030 coems into play.

GBP/USD 1-hour chart

Posted-In: FXStreetNews Eurozone Forex Markets

 

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