EUR/GBP Resuming the Decline After UK Q3 GDP Report
The Euro has been losing ground against some of the major currencies over the past few trading sessions. As a result, traders are shifting their bias to bearish in EUR/USD and bullish in EUR/GBP, although the GBP has its own issues. EUR/GBP has been bullish since December, increasing from 0.8550 to 0.8980 last week.
EUR/GBP H4 Chart – The Trend Remains Bullish
Both highs and lows are getting higher
But, the price retreated lower this week as the decline in the Euro resumed while the GBP was showing some resilience, with GBP/USD bouncing around 200 pips. On the H4 chart below we have support at 0.8840, which came where the 100 SMA (green) was standing and we saw a bounce starting from there.
UK Q4 and December GDP Report
- December monthly GDP -0.5% vs -0.3% expected
- November monthly GDP was +0.1%
Despite the softer number in December, UK GDP was seen as flat in the final three months of the year. Looking at the details on the monthly data, the services sector fell by 0.8% while production output grew by 0.3%. The construction sector was flat on the month.
- UK Q4 preliminary GDP 0.0% vs 0.0% q/q expected
- Q3 GDP was -0.3%
- GDP YoY +0.4% vs +0.4% expected
- Prior +1.9%
The UK economy shows zero growth in the final quarter of last year, despite the softer economic performance in December than estimated. The positive thing is that at least overall conditions aren’t worsening at a rapid pace but don’t expect any of the prevailing headwinds to dissipate any time soon. Recession risks are still rather pronounced for the UK this year.
EUR/GBP Live Chart
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