Pound Falls Against US Dollar As UK GDP Contracts 20.4% in Q2

The Sterling pound today fell against the US dollar amid worries that the UK economy was not recovering fast enough following its reopening after the coronavirus lockdowns. The GBP/USD currency pair today headed lower after the UK’s Finance Minister Rishi Sunak said that many people would lose their jobs due to the COVID-19 pandemic.
The GBP/USD currency pair today fell from a high of 1.3067 in the early London session to a low of 1.3005 midway through the session before rallying higher and falling again.
The currency pair today alternated between gains and losses as investors remained worried about the state of the UK economy. The release of the UK preliminary Q2 GDP report by the Office for National Statistics boosted the pound slightly. The country’s GDP contracted 20.4%, which was better than the expected 20.5% decline. The release of the positive manufacturing production and industrial production reports also boosted the pair; the industrial production print rose 9.3% in June as compared to analysts estimates of 9.2%. The disappointing UK June trade balance data weighed on the pair limiting its gains.
The pair had a muted reaction to the upbeat US consumer price index report for July, although it later fell. According to the Bureau of Labor Statistics, US headline and core inflation both rose 0.6% beating analysts estimates by 0.4% and 0.3% respectively.
The currency pair’s future performance is likely to be affected by geopolitical events and tomorrow’s US jobless claims data.
The GBP/USD currency pair was trading at 1.3027 as at 19:44 GMT, having fallen from a high of 1.3067. The GBP/JPY currency pair was trading at 139.22, having dropped from a high of 139.62.
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