Recent revelations by the Office for National Statistics unveiled a rapid 0.5% contraction of the UK’s economy in July, the swiftest in seven months, thereby reigniting concerns of a potential recession. This contraction, in tandem with indicators of a decelerating UK job market, mounts pressure on the BoE to reconsider its rate enhancement strategy. Moreover, the pair’s consistent decline beneath the pivotal 200-day Simple Moving Average (SMA) insinuates a downward inclination. Consequently, any emergent ascension may be perceived as an opportunity for divestment and could be short-lived.
Investor attention now shifts to the imminent BoE survey concerning Consumer Inflation Expectations for directional cues. Subsequent sessions, punctuated by the release of the Empire State Manufacturing Index and the Preliminary Michigan Consumer Sentiment Index from the US, might modulate USD valuations, thereby creating transient trading windows around the
GBP/USD pair. In summation, the prevailing macroeconomic landscape appears to favor a bearish stance, with the pair likely concluding in a deficit for the consecutive week.