Despite closing the fourth consecutive day in the red, the GBP/USD pair is making a stubborn stand slightly north of the 1.2200 mark as we enter the weekend. The pair’s resilience stems from the UK’s Q3 GDP expansion at an annualized rate of 0.6%, which surpassed market predictions of 0.5%.
GBPUSD Daily Chart
A Mixed Picture in the UK Economy
Despite the better-than-expected GDP growth, other data from the UK painted a mixed economic picture. Industrial Production stagnated, Manufacturing Production saw a marginal increase, while Total Business Investment experienced a quarterly drop.
Reaction from the Forex Market
Interestingly, these mixed economic indicators did not induce a substantial reaction in the GBP/USD pair. The US Dollar gained momentum following Federal Reserve Chairman Jerome Powell’s remarks suggesting a lack of confidence in achieving a sufficiently restrictive stance to bring inflation down to the target 2%.
The Fed’s Expected Stance
Markets currently anticipate a 90% likelihood of the Fed maintaining its policy stance. Should other policymakers echo Powell’s sentiment, the USD could see further strengthening as we approach the weekend.
US Stock Index Futures and Risk Sentiment
US stock index futures are exhibiting little change on the day. Any positive shift in risk sentiment could potentially cap the USD’s gains in the American session.
A Broader Look at the UK Economy
Zooming out to look at the broader economic landscape, the UK’s monthly real GDP is estimated to have grown by 0.2% in September 2023, following an uptick of 0.1% in August 2023. These figures represent a downward revision from the 0.2% growth previously reported.
Economic Data Highlights
|UK GDP||Q3 2023||+0.6%|
|Industrial Production||Sep 2023||0.0%|
|Manufacturing Production||Sep 2023||+0.1%|
|Total Business Investment||Q3 2023||-4.2%|
|Monthly Real GDP||Sep 2023||+0.2%|
|Consumer-facing Services Output||Sep 2023||-0.2%|
|Production Output||Sep 2023||0.0%|
|Construction Sector Growth||Sep 2023||+0.4%|
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