The GBPUSD currency pair was trading down over 60 pips as the British pound fell against the US dollar, driven by the weak UK Q3 GDP data released earlier today, coupled with the upbeat US GDP data released during the American session.Â
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The final UK Q3 GDP data was released today and showed that the country’s economy shrunk 0.3% during the third quarter, a figure worse than the initial estimate of a 0.2% decline.
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Furthermore, data released today indicated that real household disposable incomes (RHDI) in the UK fell by 0.5% in Q3, making it the fourth quarterly decline in RHDI.
The pound came under significant pressure during the American session after the release of upbeat US Q3 GDP data, which was recorded at 4.4%, beating previous estimates of 4.3%.
In addition, the dollar rallied higher after the US initial jobless claims data came in at 216,000, beating analysts' estimates of 221,000 jobs. The positive US macro data showed that the country’s economy was doing much better than the UK’s, driving the GBPUSD currency pair lower.
The British pound came under significant pressure after revised GDP data indicated that the country’s economy is now 0.8% below its pre-pandemic levels.
As we head towards the end of the week, the pound remains under pressure, falling from the highs printed on December 14, 2022, amid a broad recovery in the US dollar. The pair’s prospects are not promising as the US dollar recovers.
Investors are buying the US dollar as the world stares at a guaranteed recession next year as central banks maintain aggressive monetary policies to quell record-high inflation.
However, the central bank’s aggressive policies have destroyed demand in multiple sectors globally, which is why most analysts expect a global recession in the first half of next year, with a recovery following in the second half of 2023.
The pound may not fare well next year as the UK battles a cost of living crisis and a recession.
*This is not investment advice.
The GBPUSD price chart.
The GBPUSD currency pair was trading down 64.5 pips (0.53%) after the weak UK GDP data.
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