Forex Signals Brief for Aug 9: UK GDP in Focus
Rowan Crosby • 2 min read
The attention has been on the US and China all week, but today there will be a shift towards what is going on in the UK economy.
By day’s end, there could very well be a number of headlines hitting the wires suggesting the UK is on the cusp of a recession. Today the key data point will be UK GDP and there are some very worrying numbers that could spark some fear and selling in the GBP/USD.
GDP has been slowly on the decline, weighed down by the uncertainty around Brexit and softer global conditions. Today the expectation is for quarterly GDP growth to come in at 0.0%. That means no growth at all and what you might know as stagflation.
That will also likely drag down the annual growth rate to 1.4%. We did see a pop in the GDP numbers earlier in the year as many businesses were preparing for Brexit to happen around March. That didn’t go ahead but the numbers got inflated anyhow.
It’s also important to remember what the definition of a recession actually is. It is simply two periods of negative economic growth. So seeing a 0.0% rate of growth puts things in dangerous territory.
Nevertheless, the Pound is already very weak and more negative headlines could see some serious selling today.
Forex Signal Update
The FX Leaders Team finished with 3 wins from 7 signals as markets reversed sharply in many cases.
AUD/USD – Active Signal
The AUD/USD has had a very active week but overall remains soft. We heard from RBA Governor Lowe today and there was also the SoMP released. Both of which gave away little new information. We are short here looking for some more downside, but we need this 0.6800 level to give way for that to happen.
NZD/USD – Active Signal
The NZD/USD has been absolutely smashed this week and rightfully so after the RBNZ came out with a stunning 50bp rate cut. While the AUD bounced a touch, the NZD has remained weak and importantly below the 0.6500 level. We are looking for some more selling to come back in headed into the weekend.
BTC appears to be still coiling under the $12,000 level, and could very well be on the verge of another breakout move.
So far the bulls haven’t been able to get it to hold that resistance level, but we keep making higher lows which is a strong sign.
Earlier today I even noted that it looks to me like a flag pattern of sorts, which can lead to a breakout. I still remain bullish and while price holds $11,500 I will keep looking for opportunities to the long side. We will need to see $12,000 break though and that can sometimes happen as we head into the weekend which has traditionally been a volatile period for BTC.