UK GDP and British Pound (GBP) Price Outlook – GBP/USD Chart and Analysis
- The UK economy fares better-than-expected in January
- GBP/USD remains supported by the medium-term simple moving average.
UK gross domestic product (GDP) fell by 2.9% in January, beating market estimates of a 4.9% contraction. The year-on-year figure also beat market estimates, contracting by 9.2% compared to estimates of -10.9% and a prior month’s reading of -6.5%. According to the Office for National Statistics (ONS) the services sector acted as the main drag on growth in January, decreasing by 3.5% as restrictions on activity were reintroduced in response to the coronavirus pandemic.
Sterling remained steady against the US dollar around 1.3950.
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GBP/USD is slightly below its best level of the session so far but remains underpinned by a supportive 50-day simple moving average that currently sits at 1.3818. A break above 1.4018 would push the pair back to a two-week high and help strengthen positive sentiment.
GBP/USD Daily Price Chart (July 2020 – March 12, 2021)
Retail trader data show 50.21% of traders are net-long with the ratio of traders long to short at 1.01 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBP/USD price trend may soon reverse higher despite the fact traders remain net-long.
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What is your view on Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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