GBP/USD: UK economy suffers its largest fall in 41 years


GBPUSD Movement

For the 24 hours to 23:00 GMT, the GBP rose 0.69% against the USD and closed at 1.2392.

On the data front, UK’s gross domestic product (GDP) dropped 2.2% on a quarterly basis in the first quarter of 2020, registering its worst decline since 1979 and compared to a flat reading in the prior quarter. The preliminary figures had recorded a drop of 2.0%. Moreover, current account deficit widened to £21.1 billion in the first quarter of 2020, more than market forecast for a deficit of £15.0 and compared to a revised deficit of £9.2 billion in the previous quarter.

In the Asian session, at GMT0300, the pair is trading at 1.2381, with the GBP trading 0.09% lower against the USD from yesterday’s close.

Overnight data showed that UK’s BRC shop price index fell 1.6% on a yearly basis in May, compared to a drop of 2.4% in the previous month.

The pair is expected to find support at 1.2292, and a fall through could take it to the next support level of 1.2203. The pair is expected to find its first resistance at 1.2436, and a rise through could take it to the next resistance level of 1.2491.

Moving ahead, traders would keep a watch on UK’s nationwide housing prices and Markit manufacturing PMI, both for June, slated to release in a few hours.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

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