empty
11.12.2024 12:37 AM
The UK Economy Slows Down: GBP/USD Analysis

The UK's industrial sector has responded to the new budget presented by the Labour Party with decreased business confidence and slower hiring. While considered secondary indicators with limited direct impact on the pound's exchange rate, several metrics clearly show a slowdown: business confidence in November fell to its lowest level since January 2023, and the BDO optimism index dropped by 5.81 points over the month to 93.49, marking the steepest monthly decline since August 2021. According to BDO, the decline observed in both the services and manufacturing sectors "likely reflects an immediate reaction by businesses to statements made in the autumn budget."

Job vacancies in November fell at the fastest pace since the onset of the COVID-19 pandemic, with demand for personnel decreasing "sharply and at an accelerated pace."

On Thursday, the NIESR will release its estimate of GDP growth for November. Friday will be critical for the pound, with the release of data on the trade balance, industrial production, and GDP for October. While these data points may not significantly impact the pound's exchange rate on their own, they are important for forecasting the outcomes of next week's Bank of England (BoE) meeting. Before the BoE meeting, several crucial releases are expected, including preliminary PMI data for December and reports on the labor market and consumer inflation. These reports will serve as the basis for the market's final projections.

This image is no longer relevant

The BoE's decision remains unclear. The market assumes the rate will stay at 4.75%, but policymakers' comments are contradictory. MPC member Catherine Mann argues that inflation in the services sector remains "stubbornly high," driven by wage growth, and has stated she will vote against a rate cut. At the same time, MPC member Swati Dhingra, on the other hand, highlights that monetary policy is restrictive, suppressing supply volumes, investment, and consumption, suggesting that policy easing is needed.

Given these conflicting perspectives, the pound lacks clear drivers for continued growth and has limited reasons for further decline. The bearish trend remains intact, but whether the corrective phase has ended is unclear.

The net long position in GBP has decreased by £169 million to £1.53 billion. Despite this relatively small reduction, the position has moved closer to neutral. The estimated price has fallen significantly below the long-term average, but the decline has slowed over the past week.

This image is no longer relevant

GBP/USD is currently in a phase of corrective growth, which is likely not yet complete. The pair has yet to reach the 1.2830/40 resistance zone, identified as a potential turning point for a southward reversal. While another attempt at growth cannot be ruled out, it is unlikely to be substantial. A more probable scenario is a resumption of the downtrend toward 1.23, the long-term target.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold continues to show strong demand, trading near its all-time high, just below the key psychological level of $3400. The hardline international trade policy pursued by U.S. President Donald Trump

Irina Yanina 19:15 2025-04-21 UTC+2

EUR/GBP. Analysis and Forecast

The strengthening of the pair is linked to the euro's rise amid U.S. dollar weakness, driven by concerns over a potential recession in the U.S. and questions about the Federal

Irina Yanina 12:17 2025-04-21 UTC+2

Markets in limbo: awaiting next shock or revival

After the rollercoaster ride of early April, the US stock market seems to have come to a standstill. The S&P 500 is neither alive nor dead — it's starting

Marek Petkovich 11:46 2025-04-21 UTC+2

The Dollar and Stock Market Crash Continues (AUD/USD May Keep Rising While USD/JPY Declines Further)

While Europe and parts of Asia continue celebrating Easter and political life has temporarily paused, in the U.S., the "Make America Great Again" trend set by Donald Trump continues

Pati Gani 09:04 2025-04-21 UTC+2

What to Pay Attention to on April 21? A Breakdown of Fundamental Events for Beginners

No macroeconomic events are scheduled for Monday—not in the U.S., the Eurozone, Germany, or the U.K. Therefore, even if the market was paying attention to the macroeconomic backdrop, today, there

Paolo Greco 06:30 2025-04-21 UTC+2

GBP/USD Overview – April 21: The Inertial Growth Continues

The GBP/USD currency pair continued its upward movement on Friday. If we had seen such price action away from peak levels, there would have been no questions. In essence

Paolo Greco 04:01 2025-04-21 UTC+2

EUR/USD Overview – April 21: The Market Sleeps, Only Trump Can Wake It Up

On Friday, the EUR/USD currency pair made no notable movements whatsoever. This was unsurprising, as Friday marked Good Friday, and Sunday was Easter. Many banks and trading venues were closed

Paolo Greco 04:01 2025-04-21 UTC+2

US Dollar: Weekly Preview

Is there light at the end of the tunnel? The US dollar will again try to answer that question in the new week. To briefly recap: over the past

Chin Zhao 01:01 2025-04-21 UTC+2

British Pound: Weekly Preview

Several fairly interesting reports were released in the UK, but they almost did not impact market participants' actions. Demand for the British pound increased on all five days except

Chin Zhao 01:01 2025-04-21 UTC+2

Euro: Weekly Preview

There were very few changes regarding the euro last week. We observed horizontal movement for most of the week, which naturally did not affect the current wave markup. I want

Chin Zhao 01:00 2025-04-21 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.