It Will be a Good Opportunity to Sell GBP if Manufacturing and GDP Reports Send it Higher
Skerdian Meta • 2 min read
The GBP is in the middle of a slippery slope as the UK heads out of the EU with no deal, as all indications point to that. The new Prime Minister Johnson didn’t bring anything new to the negotiation table and, as a result, GBP/USD lost more than 400 pips at the end of June.
Although, for more than a week this pair has traded sideways as traders try to figure out the next move. The GBP has lost a lot of value in recent months and traders are a bit weary of pushing further down, just in case there is a last minute deal which would send the GBP surging. But, they can’t go long either right now.
So, the GBP is in a bit of a limbo. But, the round of economic data coming out of Britain this morning might shake the GBP and offer a direction for some time. The monthly and Q2 GDP reports will be released in a while, as well as the manufacturing report.
The economy contracted in March and April, but we saw an expansion in May by 0.3%. Expectations are for another expansion in June, but by only 0.1%. Manufacturing posted a big contraction of 3.9% for April which was revised higher to -4.2% later, but we saw a 1.4% rise in production in May. Although, the number for June is expected at -0.1%. The Q1 GDP report was a bit surprising, showing a 0.5% expansion, but things have deteriorated in Q2 and the GDP is expected to remain flat for that quarter.
Although, I would like to see some positive numbers today which would send the GBP higher. That would be a great opportunity to sell this currency. The 20 SMA comes at 1.23 on the daily chart, which would be a great place to short this pair if it gets up there, but first we have to see the actual numbers, so brace yourselves for some volatility guys.