- The GBP/USD pair is falling today after the ONS released UK Q3 GDP data
- The UK economy expanded by 15.5% in the quarter, coming from a low base.
- Earlier today, data by RICS showed that house prices rose to an all-time high in October
The GBP/USD is falling as traders react to the weak third-quarter GDP data from the United Kingdom (UK). It is trading at 1.3215, which is below yesterday’s high of 1.3315.
UK Q3 GDP data
The UK economy suffered a disappointing contraction in the second-quarter of this year as the country went through the first phase of the pandemic.
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In the third quarter, most travel and business restrictions had been removed, which led to an uptick in activity. The results of all this emerged today when the Office of National Statistics (ONS) released the third-quarter GDP data.
According to the bureau, the UK economy expanded by 15.5% in the third quarter, a sharp reversal from Q2’s decline of 19.8%. That increase led to an annualised contraction of 9.6%, which was better than the second quarter’s decline of 21.5%.
All constituents of the economy, including exports, personal consumption, and government spending increased in the third quarter.
That performance was still below the impressive 30% gain in the United States. Nonetheless, it was better than the overall EU growth of 15% in the third quarter.
The challenge is whether the UK will continue growing in the fourth quarter as the number of Covid cases in the country rise. That has pushed the leaders to place mandatory stay-at-home orders in England, which is an important part of the country.
Manufacturing and industrial production data
The ONS also released other important numbers today. Manufacturing production increased by 0.2% in September while the industrial production rose by 0.5%. Still, the two declined by 7.9% and 6.3% on an annualised basis.
Further data showed that the country’s trade deficit widened to more than £9.3 billion in September. The non-EU deficit widened to more than £1.65 billion.
Earlier on, data by the Royal Institute of Chartered of Surveyors (RICs) showed that the house price index rose to 68%, an all-time high. A poll by economists by Reuters was expecting the number to come in at 55%. However, the report warned of a challenging 2021, saying:
“Aside from the withdrawal of government incentives, the market may also find the more challenging employment picture a significant obstacle even with interest rates set to remain close to zero for some time to come.”
GBP/USD technical outlook
On the hourly chart, we see that the GBP/USD price has moved from yesterday’s high of 1.3315 to today’s low of 1.3180. The price has also moved below the 100-day and 50-day exponential moving averages. It has also moved below the bearish flag that was forming yesterday, which is a signal that sellers are returning. Therefore, I suspect that the pair will continue falling as bears eye the 38.2% retracement level at 1.3163. Want to start trading? Read an in-depth review of the best forex brokers here.