Disappointing UK economic data was released this morning. According to the Office for National Statistics, real gross domestic product fell by 0.5% in July 2023, with declines occurring across a range of sectors. The last time a decline of this magnitude occurred was in February of this year.
As a result of the publication, the GBP/USD rate dropped sharply. At the same time, it fell below the previous low set on September 7. Bears are putting pressure on the level of 1.245. Let us note that the last time one pound was given was 1.2443 dollars in June of this year.
Bearish arguments:
→ The UK has the highest inflation among Western countries. And the Bank of England is forced to keep rates high in order to lower them, thereby creating the preconditions for a further decline in GDP.
→ In case of a successful bearish breakdown of the level of 1.245, which provided support in September, this level may become resistance. As was the case with the level of 1.255.
→ The GBP/USD rate has been in a downward trend since mid-July, as shown by the red channel. And the median line may put pressure on the pound exchange rate in the near future.
Bullish arguments:
→ After the first reaction, the rate was restored. It is important. A bearish breakout pattern at the 1.245 level may form on the chart.
→ There is a chance that the RSI indicator will form a bullish divergence, indicating that the downtrend is exhausting.
→ The price of the pound may be supported by the lower border of the current downward channel.
Be sure to pay attention: today at 15:30 GMT+3 US inflation data will be published, which will certainly cause a surge in volatility in financial markets, including the GBP/USD pair.
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