GBP/USD has been on a four-day losing streak since Friday last week after the release of the Bank of England’s (BoE) interest rate decision for August. The pair inched 0.12% lower on Wednesday to trade at $1.3829 ahead of UK’s GDP for the second quarter.
UK’s Economic Outlook
The GBP/USD will react to the United Kingdom’s quarterly Gross Domestic Product (GDP) data for the second quarter scheduled for release on Thursday. The data will indicate the pace at which the country’s economy is recovering.
Analysts expect the quarterly GDP to jump 4.8% after declining 1.6% in the first quarter. The decline in the first quarter was boosted by contractions in services and production output. The annual GDP for the second quarter is expected to climb 22.1% after declining 6.1% in the previous quarter.
The UK Manufacturing Production for June will also be released on the same day. The monthly manufacturing production is expected to advance 0.4% after a 0.1% slip in May. The country’s monthly industrial production is expected to increase 0.3% in June after a 0.8% increase in the previous month.
The key US inflation data will be released later today. Both the headline and core Consumer Price Index (CPI) for July are expected to have slipped. With the resurgence of coronavirus infections caused by the Delta variant, there was a slowdown in the economic recovery. According to some Fed officials, the pace of the country’s economic recovery, as well as the surge in inflation will prompt discussions on hiking Fed’s interest rates.
GBP/USD Technical Analysis
The GBP/USD pair has been on a downward trend since the BoE’s interest rate decision for August last week Thursday. The pair hit an intraday high of $1.38460 before pulling back.
On the daily chart, the currency pair is trading below the 25 and 50-day exponential moving averages which is bearish. Its Relative Strength Index (RSI) is below 50 indicating weakness in its pattern.
There is a possibility that the pair will extend its losing trend in the near term to find support at $1.37500 before bouncing back. Depending on UK’s Q2 GDP data, the pair might edge higher. If this happens, the next target will be the resistance level at $1.4000.