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Can Pound Recover Post UK GDP?

Jan. 28, 2016 3:05 PM ET
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Seeking Alpha Analyst Since 2014

Hi Folks, Nathan here. I'm almost 30, from Cape Town South Africa, but don't let my age confuse you - I'm already trading for a about 15 years. Well... Ofcourse my parents didn't let me invest real money until I was 21, but when your parents and older brother and sister are all Forex Traders.... Well... You just have to be a trader. Other than trading Forex, my main hobby, I play Tennis, Poker and run a lot. It Helps keep your mind fresh. I'm also a guest blogger, coach, contributor and lately, a proud blog owner. Trade Well!

The British Pound suffered a lot of losses this past couple of weeks against the US Dollar. The GBPUSD pair even traded below the 1.4500 support area and even closed below 1.4200. The pair started recovery this week, and it would be interesting to see how far it may go.

There were a couple of important releases in the UK lately. The most important one was today, as the UK Gross Domestic Product report was published. The outcome was mostly as forecasted, which may help the GBPUSD pair in the near term.


Today during the London session, the UK Gross Domestic Product, which represents the sum of goods and services produced within the economy less the value of goods and services used up in the production process was published by the National Statistics. The market was lined up for an increase of 0.5% in the fourth quarter of 2015, compared to the preceding quarter of 2015. The result matched the forecast, as the UK GDP grew by 0.5%.

When we look at the yearly change, then the forecast was of a 1.9% rise in the fourth quarter of 2015, compared to the same quarter a year ago. The result again matched the forecast. Overall, the report was in line with the expectation, and helped the GBPUSD pair to a certain extend.

The report stated that "preliminary estimate of GDP is produced using the output approach to measuring GDP. At this stage, data content is less than half of the total required for the final output estimate. The estimate is subject to revision as more data become available, but these revisions are typically small between the preliminary and third estimates of GDP".

Technically, the GBPUSD pair looks like finding bids near the 1.4220-30 area where buyers appeared on many occasions to prevent a downside break. The pair bounced from the stated level and it looks like there is a chance of more gains in the pair in the near term. The pair is showing a lot of positive signs today, which means it may head towards the 1.4350 level, which represents a resistance area. Any further gains may take the pair towards the 1.4400 resistance area.

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