The Sterling Extended Its Losses Against The Greenback Ahead Of The UK Economic Data.
The British pound traded lower against the greenback on Monday morning as investors waited for the release of UK economic data. The UK foreign exchange market has been in the eyes of the market participants prior to the discussion of Britain’s total exit from the European Union. The report is widely expected to be an essential factor in picturing the future path of the UK economy in the following eventful months.
GBP/USD Movement
At the time of writing, GBP/USD slid 0.80 percent to 1.2184 after opening at 1.21819. The pair had a session high of 1.21903 and a session low of 1.21626. During the previous session, GBP/USD had been at 1.22800 levels, proving the disappointing turn of figures after the opening bell earlier today.
GBP/USD found resistance at 1.22257 and support at 1.21630. In case of a breakthrough, the new resistance will be at 1.22398 while a fall through will result in a new support at 1.21494. As of 10:19 UTC, the pair was trading below its 20-day SMA of 1.22589 and 50-day SMA of 1.23589, extending the downward momentum. Considering the movement of the pair, it will likely end up between 1.22000 to 1.21000 levels at the end of today’s session.
Economic Factor
The investors are looking forward to the result of the industry data on house price inflation. Last November, the house price index added 6 percent on an annual basis and 0.2 percent on a monthly basis. The November pick up at 705.60 Index points marked the all-time high since 1983 with average index points of 351.07. For the record, the house price in the UK has soared 29.4 percent in the last seven years with a 69.6 percent advance in London alone. London has the highest average house price at £474,000 on a regional basis while the Northeast has the lowest average price at £125,000 on a regional basis.
The ability of the community to own a house amid the current volatility in the market reflects a lot in the stance on the economy. For the past few months the associated political factors have caused a great turbulence not only in the consumer spending, but even in the outlook of the financial experts, specifically over the course of Brexit negotiations.
Meanwhile, the report on manufacturing and industrial production as well as trade data will be released in the mid of the week. Last September 2016, the smallest trade gap since May 2016 was recorded with an increase in exports and a decline in imports. After the conclusion of the UK referendum until October 2016, the total trade balance for goods and services soared £4.7 billion to £13.2 billion.
The comparison between exports and imports data is significantly used in determining the ability of a nation to carry out a business in and out. The flow of trade and the trade balance provide an outlook in the trade link of a nation with its neighboring countries and nations globally. These reports matter in the UK region currently after it went out of the European Union.
Bottom line
To make it simpler, improvement in the economic indicators can lift the market confidence over the currency. In line with this, the British pound has been on the watch of the investors prior to the start of Article 50 at the end of March 2017. Hence, any downbeat economic data can worsen the trend of the sterling amid the expected strength of the US currency against a basket of currencies before Trump takes the office later this month. The British currency needs a push at the moment, but nothing can be seen.