GBP/USD Drops Under 1.2200, Focus on UK GDP

The GBP/USD pair has taken offers to renew its intraday low close to 1.2180. The pair has gone down for the second day in a row while the US Dollar sheds weekly losses in the Asian session on Friday.

USD Consolidate Losses

The US Dollar consolidated downwardly within its monthly low levels. The pair traders’ sentiment in the leadoff to the UK’s quarter 2 GDP reading equally weighs on the pair.

The market’s anxiety before the release of the report appears to be strong enough to call back GBP/USD bearish traders. The US Dollar index also fell for the fifth day in a row on Thursday. The season is not far from the British political situation and the arrangements around Brexit.

GBP/USD price chart. Source TradingView

The government of the UK held a meeting with the heads of energy corporations on Thursday. The discussion revolved around the increasing costs, but PM Johnson said it is his successor who has to make the fiscal calls. 

A Conservative party member said the US is beginning to favor post-Brexit Britain as a result of not having ties with the EU.

Meanwhile, in the US, the producer price index for the month of July followed the consumer price index. The PPI stepped down to 9.8 percent year-on-year against 11.3 percent that was last reported and the market expectation of 10.4 percent. 

Expecting the UK’s GDP

The monthly PPI, thus, fell to its barest levels in the fifth month of 2020. It landed at -0.5 percent against the expected 1.0 percent and the last record of 0.2 percent. All these data gave a toned-down feeling around inflation.

Again, the eased print of the jobless claims equally showed some improvement in US employment. Although it followed the latest jobless figures, it was, however, not sufficient to aid the GBP/USD pair. The US initial jobless claims dropped to 262,000 last week against an expected 263,000 and the last print of 248,000.

The San Francisco Fed President, Mary Daly, recently said that she welcomes the idea of a 75 basis point interest rate increase for September. A few other Fed Presidents across the United States agree with her on the decision.

Wall Street began Friday’s trading on a positive note. The US ten-year treasury yields staged a rally of 2.88 percent. It should be noted that the S&P 500 futures also printed some gains close to 4,215.

In all, bears of the GBP/USD pair are ready for another round of dominance in the leadoff to the UK’s GDP publication. It is expected at -0.2 percent against the last figure of 0.8 percent. This is especially a result of the BOE’s economic transition fears.