By Areena FxUK economic activity for October showed weaker-than-expected results, with monthly GDP falling by 0.1%, contrary to the anticipated 0.1% growth, according to Scotiabank’s Chief FX Strategist, Shaun Osborne.
GBP Weakens Across the Board
Key sectors, including manufacturing, construction, and services, showed output below expectations. Additionally, the UK recorded a larger-than-expected trade deficit for the month. Despite these setbacks, the BoE/Ipsos inflation expectations survey rose to 3.0% for the next 12 months, up from 2.7% in October. As a result, the pound weakened broadly, pushing EUR/GBP higher for the second consecutive day.
Technical Outlook for GBP
Cable has steadied in the mid-1.26s on short-term charts after a decline during European trading. The pound’s drop from its trading range around 1.2750 and a weak weekly close are worsening the technical outlook, following its failure to break above the 200-day moving average (1.2820) last week. A low close for the week could signal further losses ahead.
Meanwhile, EUR/GBP’s rebound from the low 0.82 range has ended the recent GBP bull run on the cross, at least for the time being. Stronger selling interest may re-emerge near the mid-0.83s.