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The GBP/USD is down for the third consecutive day as uncertainty about the future of the UK remains. It is trading at 1.3420, which is relatively higher than yesterday’s low of 1.3190.
UK Q3 GDP data
The UK economy bounced back in the third quarter as the country continued to reopen. According to the Office of the National Statistics (ONS), the economy rose by 16% in the quarter after it dropped by a record 19.8% in Q2. That increase led to an annual decline of 8.6%, which was better than Q2’s decline of 21.5.
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The economic growth was spread across all sectors. Household spending, exports, and government spending rose. Fixed asset investments rose at a smaller pace as companies continued to focus on cash preservation. Indeed, business investments increased by just 9.4%.
These numbers were not a surprise though since they were in line with what analysts were expecting. They were also in par with what the ONS released in its first and second readings.
As such, economists at most banks and forex brokers believe that the UK economy will slow down in the fourth quarter because of the ongoing lockdowns.
London and most of England is currently under lockdown as the government deals with a new strain of coronavirus that is spreading 70% faster than the original one. Also, the country is going through a mini-no-deal-Brexit scenario since more European countries have banned travel in and outside of the country.
Further, the GBP/USD is also struggling because of the threat of a no-deal Brexit. With less than ten days to go, the two sides are still having challenges reaching an agreement. That’s because of the key disagreements on fisheries and fair-trade agreements.
A no-deal Brexit will be catastrophic for an already-struggling British economy. Manufacturers like Nissan and Honda have threatened to leave the country while banks have already shifted more than $1.2 trillions to other European cities.
GBP/USD technical outlook
On the daily chart, we see that the GBP/USD price dropped to a low of 1.3190 yesterday. This was an important level since it was the lowest level in September, November, and December.
The price is also between the ascending channel that’s shown in blue. It is also slightly above the 25-day and 50-day exponential moving averages (EMA).
Therefore, the pair will likely continue being under pressure today as traders assess the latest information on the virus. As such, the key level to watch will be the support at 1.3300 and the resistance at 1.3500.
