UK GDP Slumps
GBP is under pressure today on the back of the latest UK economic data this morning. GDP was seen sharply lower last month at -0.3%, down from 0.2% prior and below the -0.1% the market was looking for. The data comes on the back of weaker-than-forecast UK labour market data earlier in the week which saw the jobless rate rising to its highest levels since 2021. With unemployment up and activity down, near-term BOE easing expectations have jumped with traders now looking for the bank to cut rates again when it meets in August along with a further cut after the summer. While this narrative remains intact, GBP looks likely to weaken further near-term.
EURGBP Longs
The best vehicle for expressing GBP shorts at the moment looks to be EURGBP. Fresh weakness in USD means that GBPUSD isn’t seeing the same reaction as we’re getting elsewhere in the FX space. However, with the ECB recently declaring that it is nearly done with its easing cycle, there is strong, tradable divergence between it and the BOE making EURGBP longs an attractive opportunity near-term. Looking ahead, any further UK data weakness should feed into the upside move in EURGBP. Similarly, any strong eurozone data and or hawkish ECB commentary should help further underpin the rally.
Technical Views
EURGBP
The rally off the .8370 level in EURGBP is gathering pace now with the pair breaking back above .8458 and the broken bull channel lows. The next test for bull sis the .8527 level which, if broken, opens the way for a move up to .8627 in line with bullish momentum studies signals.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.