GBP/USD showed a bit of resilience during European trade on Thursday, defending small bids just under the 1.3300 level. An unexpected recent data dump from across the pond had some hopeful numbers buried within. These figures are an indication of the strength seen in GDP and Business Investment. Yet the currency pair appears to be indicative of little meaningful response to these optimistic prints.
The recent economic data indicates that the UK GDP is growing at a higher rate than anticipated. Typically, this economic expansion strengthens the value of the British pound. Business investment also beat the forecast by a large margin as firms start to get more confident in the economic outlook. Given this positive backdrop, GBP/USD is not doing much at all, trading flat near important 1.3300 barrier.
During Thursday’s trading session, GBP/USD held its ground albeit with a lack of conviction. Traders seemed jittery as they struggled to interpret the unfavorable data in the context of FPIs’ risk appetite and any possible external factors driving currency fluctuations. The little movement highlights a continuing caution among investors about the durability of recent strides forward.
Commenting on the UK economic indicators, analysts are optimistic. These may not be enough to galvanize a powerful GBP/USD rally. The duo’s ability to hang out under 1.3300 shows that traders are a bit gun shy. They’re looking for more of a confirmation before getting into big positions. To me, the current trading market is a true combination of positive sentiment towards the UK economy and negative sentiment towards global economic headwinds.
Beyond the UK data, larger market trends are always a major factor in determining how GBP/USD moves. The ongoing geopolitical tensions and a myriad of other global economic indicators are still working to raise currency valuations across the board. As such, traders are intently focused on any developments or headlines that might impact sentiment the next few days.
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