The British pound is slightly lower in the Friday session. The pair is currently trading at 1.4157, down 0.13% on the day.
UK GDP rises
The UK economy continues to forge ahead. GDP for April climbed 2.3% MoM, up from 2.2% in March. As health restrictions were eased, shops and outdoor hospitality reopened, boosting economic activity. Manufacturing and construction output were weaker than expected, but output is currently only 3.7% below its pre-pandemic level.
The news was not as positive from the manufacturing sector. Manufacturing Production for April m/m came in at -0.3%, compared to a consensus of +1.5%. On an annualized basis, the indicator jumped 39.7%, shy of the consensus of 41.8%. The huge gain was a deviation, as the reading was in comparison to data in April 2o2o, when Covid caused a severe downturn in economic conditions.
The UK is scheduled to lift the remaining health restrictions on June 21, with an aptly named Freedom Day to mark the occasion. However, there has been a sharp rise in the cases of the Covid Delta variant, and it is doubtful that the June 21 target will be met.
Dollar fails to gain on US inflation
US inflation for May easily beat the consensus, but there was no repeat performance of the April report, which sent the US dollar higher. The Fed has maintained that higher inflation is transient, and so far at least, the market is willing to dance to this Fed tune. As a result, the dollar has not made any gains, despite the strong inflation data. If inflation continues to rise, however, the Fed may have a tougher time convincing the markets that inflation is nothing to worry about.
GBP/USD Technical Analysis
- GBP/USD is facing resistance at 1.4248. Above, there is resistance at 1.4332
- On the downside, there are support lines at 1.4082 and the round number of 1.4000
