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GBP/USD Weakens Despite Steady U.K. GDP Numbers

By:
James Hyerczyk

The GBP/USD was under pressure on Friday after buyers failed to materialize after the release of U.K. QE GDP. The report showed GDP was 2.3%

GBP/USD Weakens Despite Steady U.K. GDP Numbers

UK
The GBP/USD was under pressure on Friday after buyers failed to materialize after the release of U.K. QE GDP. The report showed GDP was 2.3% year-over-year, meeting expectations. GDP for the quarter came in at 0.5%, also meeting expectations. The selling drove the Sterling to 1.5030, just slightly above the November 6 bottom at 1.5026.

U.K. stocks also fell on Friday as investors were encouraged to sell because of a sharp drop in Chinese equities. The steep break came after the Chinese regulator said it is investigating two major Chinese brokerage firms over suspected violations of securities rules.

The EUR/USD inched through $1.06 on Friday as investors geared up for the possibility of further cuts in Euro Zone interest rates next week. The European Central Bank is also considering other options including whether to stagger charges on banks hoarding cash. A consensus of traders believes the central bank will extend asset purchases and lower interest rates. The selling pressure was strong enough to put the Forex pair in a position to challenge its April bottom at $1.0520.

February Comex Gold futures weakened on Friday in reaction to the stronger U.S. Dollar. The selling pressure was strong enough to put the $1062.40 main bottom at risk. Chart watchers have pegged the psychological $1050.00 level as the next target.

Gold is set to finish at its lowest level in nearly six years as traders prepare for the first Fed interest rate hike in ten years in December.

January Crude Oil futures weakened on Friday because of the stronger U.S. Dollar and on disappointing data from China. Worries about the supply glut also continued to overshadow geopolitical concerns.

The report from China showed that profits earned by Chinese industrial companies fell 4.6 percent in October from a year earlier.

Earlier in the week, the news that Turkey had shot down a Russian-made fighter jet helped support oil prices. But the news that Russia was prepared to implement economic sanctions on Turkey eventually hurt oil prices because they will hurt crude oil demand.

There are no major economic releases from the U.S. today. Yesterday was a U.S. bank holiday so volume may continue to be low today as most major traders have probably opted to take a four-day week-end. 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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