- GBP/USD shows little reaction to the UK politics and the US-China trade news ahead of British GDP data.
- UK Manufacturing/Industrial Production, Goods Trade Balance and the US PPI will also decorate economic calendar.
With the summer recess in the UK’s Parliament holding back the British lawmakers from major drama, GBP/USD shows little reaction to rest of the world news while being modestly flat around 1.2140 heading into the Friday’s London open.
Growing speculations of the UK Prime Minister (PM) Boris Johnson’s formal announcement of a general election just after the Brexit day seems making the opposition, and some of the Tory rebels, uneasy as they are planning to hold a no-confidence vote during early September. Some among the PM Johnson’s haters are planning to approach the Queen, if the PM disobeys lawmaker’s voting to oust, while others have written senior Civil servants to intervene.
On the other hand, the US-China trade stalemate keeps dragging market into the recessionary fears with the spread between the 10-year and 2-year treasury yields of the US likely heading towards an inversion, technically signaling a global recession.
Investors will now keep an eye over the economic calendar where the preliminary reading of the UK’s second quarter (Q2) Gross Domestic Product (GDP) joins June month Manufacturing Production, Industrial Production, monthly GDP data and Goods Trade Balance. After that, July month Producer Price Index (PPI) data from the US will entertain traders.
While the GDP is likely to dip to 0.0% from 0.5% on a QoQ basis, the YoY figure might register 1.4% mark versus 1.8% earlier whereas the MoM data can weaken to 0.1% against 0.3% prior. Further, Manufacturing Production could shrink 1.1% from no previous 0.0% on a yearly format whereas Industrial Production might also dip 0.2% compared to the prior expansion of 0.9%. Additionally, Goods Trade Balance bears consensus of high deficit figure of £-11.800B versus £-11.524B prior while the US PPI ex-Food & Energy (YoY) can rise to 2.4% from 2.3%.
Technical Analysis
Despite repeated failure to cross 200-hour moving average (HMA) level of 1.2152, prices remain supported by 1.2080, which in-turn signal brighter chances of its recovery should immediate resistance breaks.
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