WIKIFX REPORT: GBP/USD LOWER ON GDP

GBP/USD has come under fresh bearish pressure and declined below 1.2200 in the early trading hours of the European session on Friday. The pair stays within a touching distance of the key support that aligns at 1.2175 and a failure of this level could bring in additional sellers.

The British pound is in negative territory today, after a contraction in UK GDP. In the European session, GBP/USD is trading at 1.2126, down 0.61% on the day. While On Wednesday Sterling posted excellent gains and surged 1.19%. The huge rise was however caused by US dollar weakness, rather than any of the pounds strength.

Inflation in the US was unexpectedly weaker than forecast, which raised market hopes that the Fed will ease policy. This led to the US dollar being less attractive and the currency took a nasty spill against all the majors

The British pound has not done so well after the UK the second-quarter GDP report was released. The economy dropped by 0.1% QoQ in July, after Junes gain of 0.8% with a decline of 0.2% expected.

GDP growth slowed to 2.9% on an annualized basis, within forecasts but sharply down from Q1‘s 8.7%. The outlook doesn’t look good heading into winter, as UK households will be hit by sharp energy price increases.

Consumers are already battling with a bad cost of living crisis, and the specter of a recession will become more likely as they tighten their purse strings.