GBP rebounds against USD, EUR after UK economy expands
Bucking a trend, UK growth in October rebounded from September’s contraction and sterling continues to rebound against the US dollar and the euro.
(Video Transcript)
UK GDP growth
Despite a widely-held belief that the UK economy is already in recession, we've seen month-on-month GDP, which shows growth of 0.5%.
Let's take a look at the figures as they stand out the release today. After a decline of 0.6% in September, this rebound came after the economy got back up and running after the national period of mourning for the Queen during September.
Car sales rebounded and there was strong growth activity as well in the health sector. However, the UK manufacturing sector shrank about 4% this year, according to the data out today and is forecast to fall by a further 3.2% in 2023.
GBP/USD
Let's take a look at what's happening with sterling. This is sterling against the US dollar. We are long on this going into what is a period up here of resistance. We're currently trading 12271.
If you are long and you want to put a trade on now, your stock would go under the underside of this red line here, which is a 200 day moving average just below the 121 level. Now, 12344, that's a little bit of resistance. And you can see this has been a line we've been following since June this year. But if we do get a candle close beyond that on the upside, 12660 is the next line. That would be a price target on a long trade.
If you are long sterling against the US dollar.
Now this data comes today after on Friday we heard from the UK government announcing extensive reforms to financial regulation that it says will overhaul EU laws that it says choke off growth now.
GBP/EUR
Sterling against the euro rose strongly on Friday around that data and we're holding on pretty much to the midpoint of that at the moment.
At 11622, we've got some resistance kicking in at one 1650 or so. And that would be an interesting point upon which to go long. If we see a candle close beyond that, then you're on the way up to this area up here at 11866. So there is a long trade here for sterling against the euro as well.
I'd want to get these interest rate meetings out of the way this week before taking any further positions on sterling against the euro, or indeed sterling against the dollar.
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