UK's positive economic growth data fuels upswing in British pound
UK GDP expands by 0.2% in the second quarter of this year
The sterling rebounds after a three-day decline against the US dollar
Industrial production in the UK showed a monthly growth of 1.8%
Markets are eagerly awaiting crucial economic data from the US today
Significant economic events impacting the UK
After a 3-day losing streak, the pound rebounded propelled by encouraging growth figures. The latest data release unveiled that the UK's GDP expanded by around 0.2% during the second quarter of the year, a marked improvement from the 0.1% growth seen in the first quarter. On a yearly basis, the UK economy displayed a growth rate of 0.4%, surpassing the previous reading of 0.2%.
Simultaneously, the data pointed to a substantial increase in industrial production within the UK, marking a 1.8% growth compared to the preceding month of June. This performance outpaced market expectations, which had anticipated a mere 0.2% growth, while the earlier data had shown a contraction of roughly 0.6% in May.
In addition, markets now focus on significant economic indicators from the US, particularly the impending Producer Price Index (PPI) data.
Following the release of inflation data last evening, US President Joe Biden remarked that the Consumer Price Index (CPI) report for July underscores the robustness of the US economy. He further noted that low-wage workers have consistently experienced progress with increasing real wages, surpassing levels observed before the pandemic.
The British pound initiated the day's trading on an ascending trajectory against the US dollar, with the currency pair hovering close to the 1.2707 dollar mark.
The British pound rose to test the resistance barrier at 1.2830 but retreated back to hover around the 1.2700 mark.
The main support level for the pair is around 1.2600, which is crucial to maintain for a potential upward move. However, if the pair falls below the support level of 1.2600, it may lead to further decline, testing the support levels at 1.2490. If broken, it is possible for the downward movement to extend to the 1.2300 level.
Conversely, should the pair manage to surpass the resistance at 1.2830, it could pave the way for additional upward momentum. it may contribute to further upward movement, testing the resistance level at 1.30. Breaking this level could extend the upward trend to test the previous high recorded in July around the 1.3150 level.