Weak UK GDP data deflate pound, pressure could increase if US inflation rises above expectations
Cable fell to intra-day low in European trading on Friday, deflated by disappointing UK GDP data.
The data show that British economy barely grew in October (m/m 0.1% vs 0.4% forecast) and sharply down from 0.6% growth in September.
The fact that the economy slowed even before the emergency of new Omicron variant of coronavirus and remains well below pre-pandemic, raise a question mark above wide expectations for the Bank of England’s first rate hike after pandemic on the policy meeting next week, as it is a harder job for the central bank to push the economy out of recession than to cool surging inflation.
Fresh weakness pressures new one-year low (1.3161), pivotal Fibo support at 1.3164 (38.2% of 1.1409/1.4249) and 200WMA (1.3151) after last week’s action generated strong bearish signal on close below thick weekly cloud.
Break of these levels would expose psychological 1.30 support and risk stronger acceleration lower on violation.
Daily studies remain in full bearish setup and supportive, while the markets await today’s key event – release of US CPI data, with November’s figure at / above forecasted 6.8% (Sep was 6.2%) to inflate the greenback and further depress the pound.
Weekly cloud base (1.3250) marks solid resistance which is expected to cap and confirm bearish stance on repeated weekly close below it.
Res: 1.3232; 1.3250; 1.3300; 1.3328
Sup: 1.3161; 1.3100; 1.3046; 1.3000