Market Analysis

With conflicting UK statistics and US retail sales being watched, the GBP/USD remains over 1.2650

Amos Simanungkalit · 15 Nov 202462.9K Views

GBP/USD has ended its five-day losing streak and is trading near 1.2680 during the early European session on Friday. The pair remains steady following the release of mixed data on the UK's Gross Domestic Product (GDP) and Industrial Output.

The UK economy recorded a 0.1% quarter-on-quarter growth for the three months ending in September, down from a 0.5% expansion in Q2. This growth fell short of market expectations for a 0.2% increase. On a year-on-year basis, UK GDP grew by 1.0% in Q3, meeting forecasts but improving from the 0.7% growth seen in Q2.

In September, monthly UK GDP contracted by 0.1%, reversing the 0.2% expansion seen in August and falling short of an anticipated 0.2% increase. The Index of Services for the three months ending in September remained unchanged at 0.1% on a three-month moving average basis. However, Industrial and Manufacturing Production declined in September, with drops of 0.5% and 1.0% month-on-month, respectively—both weaker than expected.

The US Dollar (USD) is slightly weaker after comments from Federal Reserve Chair Jerome Powell on Thursday. Powell described the US economy's recent performance as "remarkably good," suggesting that the Federal Reserve may have flexibility to gradually reduce interest rates. Additionally, Richmond Fed President Thomas Barkin noted that while progress has been substantial, further efforts are necessary to maintain momentum.

The US Producer Price Index (PPI) rose by 2.4% year-over-year in October, up from a revised increase of 1.9% in September (previously reported as 1.8%), exceeding market expectations of a 2.3% rise. Core PPI, which excludes food and energy prices, climbed by 3.1% YoY, slightly above the predicted 3.0%.

Meanwhile, the US Dollar Index (DXY), which tracks the greenback against six major currencies, is trading around 106.70, having pulled back from its yearly high of 107.06 on Thursday. This decline may be linked to a slowdown in "Trump trades."