Sterling (GBP) Price, Chart and Analysis
- GBPUSD falls sharply, erases Friday’s gains.
- UK data paints a worrying picture.
Sterling Gives Back Gains on Brexit, Growth Woes
The latest set of UK growth figures missed market expectations by a wide margin, while industrial and manufacturing production figures all fell, hitting Sterling lower.
As shown above, all data missed with worrying weakness in m/m manufacturing and industrial production, while month-on-month GDP fell to -0.4% compared to expectations and a prior reading of -0.1%.
Commenting on today’s GDP figures, Head of GDP Rob Kent-Smith said, “GDP growth showed some weakening across the latest 3 months with the economy shrinking in the month of April mainly due to a dramatic fall in car production with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.”
GBPUSD gave back all of Friday’s post-NFP gains and traded back below 1.2700. The next level of support for the pair comes in around 1.2660-1.2670 although this may come under pressure after today’s data. Below here, there is little in the way of support before the May 31 low at 1.2560.
IG Client Sentiment data paints a negative picture for the pair with 78.2% of traders long GBPUSD, a bearish contrarian bias signal. However, recent daily and weekly positional changes suggest that GBPUSD may soon reverse higher.