The British Pound (GBP) has managed to break its five-day losing streak, trading around 1.2680 during the early European session on Friday. The pair steadied after the release of mixed economic data from the United Kingdom (UK), with both GDP and industrial production figures falling short of expectations.
UK GDP grew by 0.1% quarter-on-quarter in the third quarter, a significant slowdown from the 0.5% growth seen in Q2 and below the market’s forecasted 0.2% increase. On an annual basis, UK GDP rose by 1.0%, meeting expectations but still a notable improvement from the 0.7% growth in Q2.
In September, the UK economy contracted by 0.1% month-on-month, reversing the 0.2% growth recorded in August. This was also below the anticipated 0.2% increase. The Index of Services showed no growth over the three months to September, holding steady at 0.1%. However, the industrial sector showed signs of weakness, with Industrial Production falling 0.5% month-on-month and Manufacturing Production declining by 1.0%. Both figures were weaker than expected.
Meanwhile, the US Dollar (USD) has pulled back slightly following remarks from Federal Reserve Chair Jerome Powell on Thursday. Powell described the US economy’s performance as “remarkably good,” which, he stated, gives the Fed the flexibility to gradually lower interest rates. However, Richmond Fed President Thomas Barkin noted that while the Fed has made significant progress, more work remains to sustain economic momentum.
In economic data, the US Producer Price Index (PPI) rose 2.4% year-on-year in October, exceeding expectations and up from the revised 1.9% increase in September. Core PPI, excluding food and energy, increased by 3.1%, slightly above the forecasted 3.0%.
The US Dollar Index (DXY), which tracks the performance of the greenback against a basket of six major currencies, is trading around 106.70, having pulled back from its recent yearly high of 107.06. This decline is seen as a slowdown in “Trump trade” sentiment, with investors awaiting further economic developments.
The GBP/USD pair remains sensitive to both UK economic data and the broader USD outlook, with market participants closely monitoring developments ahead of next week’s key economic releases.
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