GBP/USD trades around 2021 low, GDP misses. FTSE rises to fresh post pandemic high.
GBP/USD trades around 2021 low, GDP misses
The Pound (FXB) dropped over 1% in the previous session, below 1.34 to a yearly low after the surprise jump in US CPI to 6.2% and as Brexit concerns dragged on sterling.
The UK government appears to be preparing to trigger article 16 to end the Northern Ireland – EU post Brexit trade deal.
Today weak UK GDP data is unlikely to help the case for GBP/USD. UK GDP grew just 1.3% QoQ in Q3, from 5.5% in Q2 and short of 1.5% forecast. Supply chain disruptions, labour shortages and rising energy prices dragged on growth.
The BoE appears to be more focused on jobs than growth so a December rate hike is still on the cards. Growth momentum is likely to remain weak in Q4.
The UK economy is still 0.6% smaller than where it was in February 2020.
Where next for GBP/USD?
GBP/USD has been trending lower since early January. The pair tanked o fresh yearly lows in the previous session, below 1.34.
Whilst today, has seen a mild tick higher. However, the move lacks conviction and the RSI is in bearish territory indicating further losses could be on the cards.
Support can be seen at 1.3393 yesterday’s low ahead of 1.333 and 1.32 the high from January 2020.
Any meaningful recovery would need to retake 1.3510 November 5 high and 1.3680 the 50 & 100 sma. It would take a move above 1.3830 for a bullish bias.
FTSE rises to fresh post pandemic high
The FTSE is set to open the session higher along with the majority of its European peers is looking to start the session high.
The weaker Pound is helping the FTSE advance thanks to the favorable exchange rate for the multi-nationals.
House builders will be in focus after upbeat results from Taylor Wimpey.
A rebound in crude oil prices, after 3% losses in the previous session could underpin oil majors.
Where next for the FTSE?
The FTSE is extending its rebound from 6825 hit on September 20. The price has retaken the 50 & 100 sma. It trades above its multi-month rising trendline.
The RSI is supportive of further gains with a move towards 7350 and 7490 the February 20.
It would take a move below 7250 to negate the near-term uptrend. Further support can be seen at 7200. A break below here exposes the 50 sma at 7145.
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