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British pound closing in on 1.39

The British pound is in positive territory for a second successive day. GBP/USD is currently trading at 1.3883, up 0.35% on the day.

The markets were treated to a data dump out of the UK today, with the highlights being GDP and Manufacturing Production. Investors shrugged off a weak GDP for July, as the economy expanded a negligible 0.1%. This was below expectations and much weaker than the 1.0% gain in June. On a more positive note, GDP grew by 3.6% in the three months to July, due to the reopening of much of the services sector in July. Manufacturing Production came in as expected at 6.0% (YoY), as manufacturing continues to expand.

In the US, inflation remains a critical issue for the markets, which means that US inflation indicators are being closely watched and should be treated as market-movers. The US will release the Producer Price Index (PPI) for August, with the consensus at 8.2%, compared to 7.8% in July. Inflation remains red-hot in the US, but the Fed insists that the jump is transitory and that inflation will ease. However, if we continue to see inflation rising in the final months of 2021, the markets will become more sceptical of the Fed’s stance, and policymakers may have to adjust monetary policy in order to curb inflation, which is well above the Fed’s target of 2%.

The Federal Reserve Beige Book, which was released ahead of the FOMC meeting on September 21-22, points to a bumpy road for the US economy. The report stated that the economy “downshifted slightly” in August as the Delta variant of Covid took a toll on the services particularly, dining, travel and tourism. At the same time, the report stated that the unleashing of demand has resulted in rising prices and labor shortages. Importantly, the report casts doubts on the Fed stance that inflation is transitory, and we could see more Fed members begin to question this view in the coming weeks and months.


GBP/USD Technical Analysis



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Kenny Fisher

Kenny Fisher [6]

Market Analyst at OANDA [7]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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