Investors await UK GDP

The British pound is almost unchanged in the Thursday session. Currently, GDP/USD is trading at 1.3828, down 0.07% on the day. In Asia, China and Japan are closed for the Lunar New Year, resulting in a lack of movement in the equity and currency markets on Thursday.

 Markets brace for weak GDP

Investors will be treated to a data dump out of the UK on Friday. The highlights include the GDP reports and Manufacturing Production (7:00 GMT), so we could see some stronger movement from the pound on Friday, after a sleepy Thursday. The quarterly GDP report has seen double-digit swings, as the economy went into a tailspin in Q2 (-20.2%), with a spirited recovery in Q3 (+15.5%). In contrast to these figures, the markets are expecting a muted Preliminary GDP for the first quarter, with a street consensus of 0.5%, which points to practically no economic growth.

The monthly GDP report showed a weak read of -2.6% for November, although this decline was not a steep as the estimate of -4.6%. December is expected to be much better, with an estimate of 1.0%. The UK is currently under lockdown, which is hampering economic activity. With the vaccine rollout gathering steam, this should lend a boost to the economy moving forward in 2021. The ING Group is projecting a strong rebound for the UK, to the tune of 5% in the second quarter.

Another tier-1 event that traders and investors should monitor is Manufacturing Production. The indicator showed strong growth in mid-2020, including a read of 11.0% in June. However, recent releases have been muted and growth was just 0.7% in November. An identical figure is expected in the December release.

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GBP/USD Technical

  • Having crossed above resistance at 1.3808 earlier in the week, GBP/USD now faces resistance at 1.3879. Above, there is resistance at the round figure 1.4000.
  • There is support at 1.3616. Below, we find support at 1.3495

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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