- Pound (GBP) advances even as UK GDP disappoints +6.6% in July vs 6.7% exp.
- Brexit fears linger as trade talks could collapse at the end of the month
- US Dollar (USD) pares yesterday’s gains driven by safe haven flows as US tech stocks continued to slide
- US inflation in focus, expected to show steady increase
After diving over 1.5% in the previous session, the Pound US Dollar (GBP/USD) exchange rate is attempting a rebound in early trade on Friday. The pair settled at US$1.2803 in the previous session after striking a fresh 7 week low of US$1.2774.
At 06:15 UTC, GBP/USD trades +0.16% at US$1.2824. The pair is on track for losses of 3.5% across the week, its steepest weekly decline since early March.
UK GDP data revealed that the economy grew 6.6% in the month of July slightly below the 6.7% growth forecast. GDP is still a massive 11.7% below its coronavirus peak as it attempts to recover from its deepest recession of -20.4% in the second quarter.
The data comes after the UK government shows no signs of giving in to the EU ultimatum to scrap plans to undercut the Brexit divorce bill, putting Brexit talks are on the brink of collapse.
The US Dollar is edging marginally lower versus its major peers giving up gains from the previous session. The greenback advanced on Thursday as another sell off in big US tech stock unnerved investors who sought the safe haven protection of the US Dollar.
US initial jobless claims disappointed on Thursday, with 884,000 new claims, analysts had been expecting a drop to 846,000. The previous week saw claims of 881,000 meaning that the number of Americans signing up for unemployment benefit for the first time was unchanged, pointing to the labour market recovery slowing.
Attention will now turn to US inflation data as measured by the consumer price index. Analysts are expecting inflation to increase 0.3% month on month in August, down from a 0.6% increase in July. On an annual basis, expectations are from a 1.2% increase, up from 1%. Inflation clearly remains low but is showing signs of perking up as the US economy starts to reopen