Sterling, UK GDP and Brexit trending points
- UK GDP of fourth quarter of 2018 missed expectation by a wide margin amid Brexit chaos, rekindling worries in the market ahead.
- A hard Brexit or no-deal Brexit appears to be imminent, since the UK PM had met with a backlash from EU commission, since the commission asked for an insurance for the Northern Irish Border in a long-term outlook
- As Brexit implications have become more imminent and UK GDP falters in the Q4, 2018, the GDP falters on Monday, the 11thof February, 2019, residing just above its psychological support level, 1.2900 region.
Sterling under pressure amid an uncertain divorce deal and faltered gross domestic product data on Q4, 2018
The latest outlook towards the UK economy has been showing steep signs of decline and multiple large businesses including financial institutions such as Barclays, had moved their assets from Britain to Paris & other eurozone countries in order to remain operational after a chaotic divorce with European Union.Following nerve-wracking worries and recession risks all of over the Britain on an imminent hard-Brexit or no-deal Brexit, the business & service sectors had been terribly tottered, the result of which had been reflected in the monthly GDP figure.
The monthly GDP figure dropped to -0.4 percent from a previous +0.25 percent, while the quarterly growth fell to 0.2 percent from 0.6 percent of a quarter earlier. Following the reveal of UK GDP data form the Office of National Statistics, the GDP plunged against a gauge of global currencies including the major currencies as well.
In the intra-day trading, the Great Britain Pound is residing at 1.2898 at February 11th, GMT. 13.30, down by 0.37 percent or 49pips. Meanwhile, prefixing further penetration in the UK economy, there had not been any notable deal in the Brexit negotiation and UK hard data became more prominent, alongside, the Governor of Bank of England, Marke Carney, last week downsized the UK GDP forecast growth for 2019 to 1.2 percent from prior 1.7 percent.
GBP/USD daily price chart
GBP is now trading in a sideway momentum around 1.2900 and it could as well test its initial support level at 1.2894, January 21stlow, before attempting to breach below three-week low at 1.2852. Since the IG retail sentiment data displayed 61.2 percent clients are in net long position, indicating an upcoming bearish momentum, the GBP may falter further, alongside euro, while US dollar kept gaining.
On the flipside, there had been little hopes for the buyers and the trend might continue, until a Brexit solution or reform could be brought in to light. The UK PM Theresa May had proffered one week to their lawmakers to discuss about the details before listening to their voice on February 27th, on UK House of Commons. Ahead of another Brexit vote, with less than 1 and ½ month remaining of a Brexit deadline, GBP may experience downbeat momentum throughout the week, while an upside break above 1.30 level seems highly unlikely.
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[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]