The GBP/USD pair falls today according to ONS GDP data for UK Q3
The British economy expanded by 15.5% in the quarter, starting from a low base.
Earlier today, RICS data showed that house prices rose to an all-time high in October.
The GBP/USD is falling as traders react to the weak third quarter GDP data from the United Kingdom (UK). It is trading at 1.3215, which is lower than yesterday’s high of 1.3315.
UK Q3 GDP data
The British economy suffered a disappointing contraction in the second quarter of this year as the country went through the first phase of the pandemic.
By the third quarter, most travel and business restrictions had been lifted, leading to an increase in activity. The results of all this were announced today when the National Statistics Office (ONS) released GDP data for the third quarter.
According to the Office, the UK economy expanded by 15.5% in the third quarter, a significant reversal of the 19.8% decline in the second quarter. This increase led to an annualized contraction of 9.6%, which was better than the 21.5% decline in the second quarter.
All components of the economy, including exports, personal consumption and government spending, grew in the third quarter.
This performance was still below the impressive 30% growth in the United States. Nevertheless, it was better than the overall EU growth of 15% in the third quarter.
The challenge is whether the UK will continue to grow in the fourth quarter as the number of Covid cases in the country increases. This has prompted leaders to introduce compulsory home visits in England, which is an important part of the country.
Data on manufacturing and industrial production
The ONS also released other important figures today. Manufacturing output rose by 0.2% in September, while industrial production increased by 0.5%. Nevertheless, on an annualized basis, both fell by 7.9% and 6.3% respectively.
Further data showed that the country’s trade deficit widened to more than 9.3 billion pounds sterling in September. The non-EU deficit widened to more than £1.65 billion.
Earlier, data from the Royal Institute of Chartered of Surveyors (RICs) showed that the house price index rose to 68%, an all-time high. A survey of economists by Reuters expected the index to reach 55%. However, the report warned of a challenging year 2021:
“Aside from the withdrawal of government incentives, the market may also see the more difficult employment situation as a significant obstacle, even if interest rates remain close to zero for some time to come”.
Technical outlook GBP/USD
Technical Table GBP/USD
On the hourly chart we can see that the GBP/USD price has moved from yesterday’s high of 1.3315 to today’s low of 1.3180. The price has also moved below the 100-day and 50-day exponential moving averages. It has also moved below the bearish flag that formed yesterday, which is a signal that sellers are returning. Therefore, I suspect that the pair will continue to fall, keeping an eye on the 38.2% retracement level at 1.3163. Do you want to start trading? Read a detailed report about the best forex brokers here.