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After a long lasting streak of positive data, the UK received some disappointing figures: the trade balance deficit for July rose from 8.2 to 9.9 billion, exceeding expectations for standing at 8.2 billion.

Manufacturing production climbed by 0.2%, short of expectations for a rise of 0.3%. Also the wider industrial production disappointed by remaining flat instead of rising by 0.2%.

GBP/USD dropped below the 1.56 line already before the publication of these figures, and eventually extended its losses and reached 1.5565. The 1.56 line has been a war-zone for the cable, which never managed to re challenge the peak of 1.57.

Towards the all important Non-Farm Payrolls release in the US, the pound is not as strong as it seemed earlier in the week (with excellent PMIs), but the fall wasn’t that big and the underlying economy is still very strong.

In case of a strong Non-Farm Payrolls report, the pound is likely to drop, but not so deep. In case of a weak result, GBP/USD can be a bigger winner.

Further reading: GBPUSD forecast.