Good news is not good enough for the pound. The final GDP release in the UK surprised with an upgrade: a quarterly growth rate of 0.7% instead of 0.6% initially reported. As this is a quarterly figure, it equals around 3% annualized, far better than the paltry 1.4% reported in the US.
However, GBP/USD continues trading just under 1.30, unable to lift its head. The low so far has been 1.2936. Support awaits at 1.2840, followed by the 31 year low of 1.2790. Resistance is at 1.3060, if 1.30 is broken.
It’s not only headlined GDP that beat estimations, but also the components: services advanced 0.6%, double the expectations, and investment is at 1%, also double the projections.
When a currency fails to rise on good news, it is a sign of weakness. Specific moves today may be related to end-of-month balancing, and may be the exception, not the norm. However, Sterling has been struggling for quite some time. Talk of “Hard Brexit” weighed heavily. Three months after the historic Brexit vote and over two months after the formation of a new government, there is no plan in sight. “Brexit means Brexit, actually, ” says PM May, but what does it actually mean?
Uncertainty isn’t hurting the economy yet, but this may come later on.
More: GBP: Some Profit-Taking On Shorts Into Quarter-End; We Stay Bearish – NAB
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