GBPUSD Reaches One-Week High Following Upbeat GDP Data
The British Pound erased earlier losses and moved firmly higher after data on Thursday showed the U.K. economy grew faster than economists’ forecast in the third quarter – the period following the country’s Brexit vote.
The pair GBPUSD hit an intra-day high at $1.22701 – the highest in the past week following the report by the Office for National Statistics which showed the U.K. gross domestic product expanded 0.5% in the July-September period. The figure was lower than the unusually strong growth of 0.7% recorded in the second quarter, but it has comfortably outpaced forecasts calling for an expansion of 0.3%.
Particularly, service sector inched 0.8% higher, offsetting declines in other three main industrial groups namely construction, agriculture and production. Compared with the same quarter a year ago, growth ticked up 2.3% – the fastest pace in more than a year.
Last quarter’s data is considered to be more importance than usual as it covers the first full quarter after the U.K.’s vote in June to leave the European Union. Since then, the economy has proved to be more resilient than initially forecast, which may diminish the chance that the Bank of England will slash rates further after a cut in August.
In the U.S, weekly jobless claims and durable and core durable goods orders for September are due later, followed by pending-home sales for the same period.
Fig: GBPUSD H4 Technical Chart
Since a steep slide in the period from September 29 to October 11 which sent GBPUSD below the 23.6% Fibonacci retracement at 1.29360, the pair has been moving sideways. GBPUSD has been kept locked between the support at 1.20880 and the resistance at 1.23300, but it is heading upwards to attempt the upper boundary. The upside is expected to extend as RSI index has bounced back from 50 line, confirming the uptrend.
GBPUSD Trade suggestion
Buy Stop at 1.22600, take profit at 1.23300, stop loss at 1.22000