Markets

Breakdown of the latest developments on the global exchanges
Nov 12, 2020, 9:38 AM GMT
#Economics

British GDP Growth Rate Stifled in Q3 by Lockdowns

The Office for National Statistics in the UK published its quarterly findings concerning the British Gross Domestic Product that was recorded in the three months leading to September.

According to the findings of the economic report, the rebound reached 15.5 per cent, which fell short of the initial market expectations that were pointing to a potential growth of 15.8 per cent. This marks a noticeable recovery from the nearly 20 per cent crunch that was observed in the wake of the initial coronavirus fallout.

The impact of the smaller-than-expected GDP growth, which is exacerbated by the extended lockdowns across Britain, comes shortly after the poor unemployment data.

When considered together, the two factors underscore erratic and uneven recovery, which represents a major point of concern for the Bank of England. The BOE was recently compelled to broaden its Asset Purchase Facility in a bid to hedge against the risks of a no-deal Brexit on the 31st of December.

At any rate, the downbeat GDP and unemployment statistics are likely to put extra pressure on the pound in the near-term, despite the currency's strengthening over the last couple of weeks.

As can be seen on the 4H chart below, the euro is currently gaining against the sterling, even as the underlying sentiment remains ostensibly bearish. The EURGBP managed to shoot back up within the boundaries of the descending channel, and this may not be just a minor ripple.

The price action looks ready to test the strength of the major support level (currently serving as resistance) at 0.89600 next. The MACD indicator demonstrates the marginally rising bullish momentum.