In early October, the GBP/USD decline exceeded 10% from its summer high, which was very worrying. However, the weakening of the US dollar and changes in sentiment in the US government bond market allowed the pound to strengthen.
Important news about UK GDP was published this morning:
→ The Office for National Statistics estimates that real gross domestic product (GDP) rose 0.2% in August 2023, after falling 0.6% in July 2023;
→ production of services grew by 0.4% in August 2023 and became the main driver of GDP growth;
→ the construction sector performed worse than others, falling 0.5% in August 2023 after falling 0.4% in July 2023.
In general, although the UK GDP picture gives reason for some optimism, the GBP/USD rate today reacted with a decline to the publication of this news. Perhaps influencing factors that are noticeable to technical analysis are coming into play?
→ The GBP/USD rate rose to the level of 1.234. After breaking through it in the second half of September, the bears accelerated the decline, so the price may demonstrate that they have some control.
→ The GBP/USD rate rose to the upper border of the downward channel.
Bulls may hope that the 1.225 level (which served as resistance) will help them maintain the progress made in October. It is possible that if the forces of supply and demand balance each other, we will see exchange rate fluctuations between 1.234 and 1.225 in the coming days.
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