Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🚨 Don’t miss your updated list of AI-picked stocks for this month
Pick Stocks with AI
British Pound Edges Higher After GDP Surprise
www.investing.com/analysis/british-pound-edges-higher-after-gdp-surprise-200640868
British Pound Edges Higher After GDP Surprise
By MarketPulse (Kenny Fisher) | Aug 11, 2023 05:31AM ET The British pound is slightly higher earlier on Friday. In the European session, GBP/USD is trading at 1.2706, up 0.24%.
UK GDP surprises to the upside
The week wrapped up on a high note in the UK, as the economy grew by 0.2% q/q in the second quarter. The gain was indeed modest, but it beat the consensus estimate of zero growth and the first quarter reading of 0.1%. The struggling UK economy thus managed to elude stagnation. Another good piece of news was that June GDP climbed 0.5% m/m, above the estimate of 0.2% and rebounding from the May reading of -0.1%. This is the highest monthly growth rate since October 2022.
The Bank of England has had a rough time in its battle with inflation, despite raising interest rates to 5.25%, the highest level since February 2008. Inflation stands at 7.9%, the highest in the G7 club and nowhere near the BoE’s target of 2%. The slight improvement in economic growth will be welcome news at the Bank as there is a real concern that the combination of rising rates and a weak economy could result in a recession.
The market’s reaction to the GDP release was muted. The British pound rose about 40 basis points after the GDP release but pared most of these gains.
US inflation report likely cements Fed pause
The July US inflation report was an interesting mix. Headline CPI accelerated for the first time in 13 months, with a reading of 3.2%. This was higher than the 3.0% gain in May and just shy of the consensus estimate of 3.3%. The upswing didn’t result in any swings from the US dollar or the equity markets, as CPI was expected to rise due to base effects.
Core CPI, which is more important for the Fed than the headline indicator, ticked lower to 4.7% in July, down from 4.8% in June. On a monthly basis, the core rate climbed by 0.2% for a second straight month. If this trend continues, core inflation will fall significantly.
Perhaps the most important takeaway from the inflation report is that it should cement a pause from the Fed in September. The odds of a rate hike fell to just 10% after the inflation release, down from 0.14% prior to the release, according to the CME FedWatch tool. Is the Fed’s rate-tightening campaign finally over? That question is yet to be answered, but a pause in September will lead to increased expectations about rate cuts in 2024.
GBP/USD Technical
- There is resistance at 1.2747 and 1.2874
- 1.2622 and 1.2495 are providing support
Related Articles
USD/CAD Extends Rally as Markets Eye GDP and PCE Reports
By Kenny Fisher - Feb 28, 2025
The Canadian dollar is calm in the European session, trading at 1.4438, up 0.02% on the day. Later today, Canada releases GDP and the US publishes the Core PCE Price...
USD/CAD Bounces Up, But Can It Keep the Momentum?
By Trading Point - Feb 28, 2025
USD/CAD recoups drop below EMAs as March tariffs become reality Technical indicators suggest quick rebound is fragile; focus on 1.4470 USD/CAD made a strong comeback just when...
US Dollar Rallies on Trump’s Tariff Shock, FX Market Turns Defensive
By Chris Turner - Feb 28, 2025
In response to criticism of tariff 'confusion', President Trump stepped in emphatically yesterday to announce that tariffs would be going ahead on Canada, Mexico, and China next...
British Pound Edges Higher After GDP Surprise
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.