The Sterling has crashed to its lowest level in over a month and has dropped within a whisker of returning back below 1.30, despite the highly-anticipated UK GDP headline reading being announced above expectations at 0.6%. This headline reading should have alleviated some of the ongoing concerns over slowing economic growth, but it seems that the persistent post-Brexit uncertainty over what the economic fallout could be for the UK economy is continuing to haunt investor attraction and is reducing buying sentiment towards the British Pound. There is still ongoing speculation that the Bank of England is going to have to unleash further stimulus in some form, which has ensured a weak sentiment towards the Pound. This has been coupled with the worrying PMI data from late last week, suggesting that the UK economy could face a contraction.
The GBP/USD needs to cleanly break below 1.30 for a potential return towards its recent milestone lows to be a more distinct possibility, however the current sentiment towards the British Pound over the medium and longer-term does remain most likely in favour of sellers at this stage. Investors will now turn their attention towards the upcoming Federal Reserve monetary statement this evening where any possible clues on a future divergence in monetary outlook between both the Bank of England and Federal Reserve could enhance the longer-term outlook for further probable losses.
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