By the end of this week, the British currency continues to experience pressure from the ambiguous economic statistics in the country. Experts fear the strengthening of negative trends and the collapse of sterling.
On the morning of Friday, August 13, the pound is slightly fluctuating against the dollar, but these fluctuations are insignificant. They do not have a drastic impact on the GBP/USD pair, which is at 1.3807, trying to move higher. A day earlier, bearish sentiment prevailed in tandem, as a result of which the first alternative target was reached (1.3808).
Currently, the GBP/USD pair has consolidated below the moving averages with periods of 144, 34, 89 and 55, which have now become resistance levels (1.3832, 1.3856, and 1.3875). Analysts expect the onset of bulls, whose potential targets are at 1.3846 and 1.3878. The elimination of the bullish scenario is possible in the event of a breakdown of the powerful support level of 1.3803, which will open the way to the levels of 1.3778 and 1.3730.
Macroeconomic reports showing a slightly contradictory state of the British economy were crucial for the further dynamics of the GBP. On Thursday, August 12, the market saw fairly strong data on the UK economy. According to a report by the Office for National Statistics, in the second quarter of 2021, the British economy grew by 4.8%, which is in line with economists' estimates.
According to the calculations of ING bank's currency strategists, the strong data on UK GDP did not come as a surprise to the market. At the same time, experts doubt the positive prospects of the country's economy in the third quarter of 2021. According to preliminary estimates, in the second quarter of this year, UK GDP increased by 22.2% year-on-year, and by 4.8% in the quarter. At the same time, in June, industrial production in the country decreased by 0.7%, although an increase of 0.3% was predicted.
Before the publication of the macroeconomic report on the UK, experts expected that it would show a noticeable economic recovery. In such a situation, the probability of a reduction in the quantitative easing (QE) program by the Bank of England would be high. The implementation of such a scenario will allow the GBP/USD pair to strengthen, experts say.
Economists are concerned that the data on industrial production in the UK indicate a "deflation" of the recovery momentum. The reduction in industrial production (by 0.7%) is complemented by a slowdown in the annual growth rate of 8.3%. Analysts are sounding the alarm, believing that the spark of this slowdown will provoke a fire of further decline, which will also affect the GBP.
Experts believe that the US trade conflicts with China and other countries are the catalyst for the downward trend in the British economy. They hinder economic growth in a number of countries, in particular in the UK. The current situation has a negative impact on the pound, which has to make a lot of efforts to stay afloat.