GBP/USD makes half-hearted bounce as USD traders take profit
GBP/USD edges higher on Friday as US Dollar traders take profit following a strong rally for the Greenback to new 2024 highs.
The bounce remains strained because of the release of weak UK GDP growth data clouding the outlook.
Some analysts remain positive about the outlook for the UK despite the data, and this supports Sterling.
GBP/USD edges higher on Friday, reaching the 1.2680s, as traders reduce their short exposure before the weekend. GBP/USD claws its way up from intraday oversold levels reached on Thursday when it registered near 2.0% losses on the week. This came after the US Dollar (USD) outperformed due to positive US economic data, the residual effect of Trumponomics, and upbeat comments from the Federal Reserve (Fed) Chairman Jerome Powell.
By rights, the pair should still be falling after the release of weak UK growth on Friday. However, it is possible traders are now judging the US Dollar as overvalued. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, reached a new 2024 high on Thursday, which could be restraining Dollar-traders’ “irrational exuberance”.
Although it seems counter-intuitive, the Pound Sterling (GBP) is actually strengthening despite the release of negative UK Gross Domestic Product (GDP) growth data showing the economy shrank by 0.1% in September. This was lower than the 0.2% expected and 0.2% of the previous month.
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