Selling GBP/USD After the Negative UK GDP in August
The retrace higher in GBP/USD looks complete so we decided to open a sell forex signal, as the GDP turned negative in August
The UK economy has been feeling the pressure from surging prices and in recent months we have seen the GDP numbers turn positive and negative. July’s number was revised lower today, from 0.2% to 0.1%, while August’s GDP number came at -0.3% against 0.0% expected. These are clear signs that the economy is heading into a recession, with both services and manufacturing sectors falling in contraction in summer.
UK August GDP Report
- UK August GDP Estimate MoM: -0.3% vs 0.0 Forecast%
- July GDP was 0.2%, revised to 0.1%
- Industrial production -1.8% vs -0.1% expected
- Manufacturing production -1.6% vs -0.1% expected
“The economy shrank in August with both production and services falling back, and with a small downward revision to July’s growth the economy contracted in the last three months as a whole,” ONS Chief Economist Grant Fitzner said.
These are some grim GDP numbers, but on the plus side (I guess), GDP is backward looking. Of course, this isn’t such a good thing if you believe the situation has deteriorated since the data!
GBP/USD H1 Chart – The 100 SMA Acting As Resistance
The retrace higher is complete on the H1 chart
This pair fell below 1.10 yesterday after the rejection at the 200 SMA, with the Bank of England announcing that they will end gilt buying operations on October 14, which has turned gilt yields bullish again. This is bearish fo the GBP, so we decided to open a sell GBP/USD signal at the 100 SMA (green) which was rejecting the price.
GBP/USD Live Chart
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