It was a busy morning for the GBP/USD. October GDP, manufacturing and industrial production, and trade data drew interest this morning.
The stats were GBP/USD bullish, with the UK economic outlook raising concerns over the likely effect of BoE rate hikes on the UK economy.
In October, the UK economy contracted by 0.3% on a three-monthly average basis versus a contraction of 0.2% in September. Economists forecast the economy to contract by 0.4%.
However, the UK economy expanded by 0.5% in October versus a 0.6% contraction in September. Economists forecast 0.4% growth.
According to the Office for National Statistics,
- The services and construction sectors grew by 0.6% and 0.8%, respectively. However, industrial production was flat after growing by 0.2% in September.
- Manufacturing production increased by 0.7% in October after stalling in September to deliver the only positive contribution to industrial production.
- Year-over-year, the UK economy grew by 1.5% in October versus 1.3% in September.
Trade data was also GBP positive. The UK trade deficit narrowed from £15.66 billion to £14.48 billion, with the non-EU trade deficit narrowing from £8.55 billion to £4.82 billion.
While today’s numbers were upbeat, they are unlikely to force the BoE into a more hawkish move on Thursday. Month-on-month, investors need to consider the effect of the additional bank holiday for the State Funeral of HM Queen Elizabeth II.
GBP/USD Price Action
Ahead of economic indicators, the GBP/USD rose to an early high of $1.22609 before falling to a pre-stat low of $1.22117.
Investor angst over the Tuesday US CPI Report and Wednesday Fed monetary policy decision weighed on riskier assets and the GBP/USD.
In response to the stats, the GBP/USD fell to a post-stat and a current-day low of $1.22060 before finding support.
At the time of writing, the GBP/USD was down 0.21% to $1.22298.
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Next Up
It is a quiet start to the week. There are no US economic indicators for investors to consider ahead of tomorrow’s CPI Report. The lack of stats will likely peg the Pound back from a rebound. There are also no BoE or FOMC members speaking today.
The lack of stats and central bank commentary will likely leave the GBP/USD pair in the hands of market risk sentiment through the afternoon session.