The GBP/USD currency pair lost all its early gains and tumbled to new session lows after the release of UK GDP growth estimates, which were in line with expectations. The currency pair was on track to retrace some of the gains made during the previous session as the pair had rallied on weak US data.
The GBP/USD currency pair lost over 50 points to hit a daily low of 1.3284 after the release of the GDP data.
The release of the UK third quarter GDP growth estimates by the Office for National Statistics in the early European session is what triggered the pound’s sudden drop. The report indicated that the UK economy was poised to expand by 0.4% in the July-September period, which translates into an annualized GDP growth rate of 1.5%. Further data indicated that UK total business investment increased by 0.2% in the third quarter, which was lower than the expected 0.3% increase.
Despite the pound’s decline against the greenback in today’s session, most analysts expect the pair to rebound given the massive buying interest in the GBP futures market. The renewed optimism surrounding the Brexit negotiations is also likely to boost the pound over the short-term. The pair’s decline was not due to the greenback’s strength as evidenced by the US Dollar Index trading below its opening price of 93.30.
The currency pair”s short-term performance is likely to be influenced by political events in both the US and UK given that US markets are closed for the Thanksgiving holiday.
The GBP/USD currency pair was trading at 1.3307 as at 11:15 GMT having recovered from a daily low of 1.3284 after the release of CBI UK total distribution sales report. The GBP/JPY currency pair was trading at 147.93 having declined from a high of 148.48.
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