GBP/USD forecast ahead of the upcoming UK GDP data
- The GBP/USD maintained its bullish trend on Thursday.
- Investors are waiting for the upcoming UK GDP data.
- The pair will likely rise to 1.3900, which is an important psychological level.
The GBP/USD price rose sharply on Thursday as investors waited for the upcoming UK GDP data that are scheduled for Thursday morning. The pair rose to 1.3850, which was about 1% above the lowest level this week.
UK GDP data ahead
The key catalyst for the GBP/USD this week will be the final release of the UK July GDP data. Economists polled by Reuters expect the data to show that the economy made a modest recovery in July. This is after it rebounded by 22.2% in June. The pace of growth, however, will be relatively slow since the country experienced more Covid cases in July.
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The Office of National Statistics (ONS) will also publish the latest manufacturing and industrial production numbers. Economists expect these numbers to show that the two increased by 6.0% and 3.0%, respectively. These are important numbers because they provide a gauge of the strength of the economy.
These numbers will come two days after Andrew Bailey, the Bank of England governor addressed parliament. In his statement, he said that the country’s economy was reopening at a faster pace than expected. Nonetheless, he warned about the complacency and pressed people to return to the workforce. Recently, many companies have complained about labour shortages.
The UK GDP data will also come at a time when the housing market is holding steady. Data published by Halifax revealed that home prices jumped sharply in August after wavering in the previous two months. Another data by the Royal Institute of Chartered Surveyors (RICS) showed that the pace of home purchases declined for the second straight month in August.
Therefore, these numbers will provide more colour on actions by the Bank of England (BOE). The BOE is expected to start tapering its asset purchases in the fourth quarter.
The GBP/USD started its rebound on Wednesday during Bailey’s testimony. The pair is trading at 1.3850, which is close to the upper side of the Bollinger Bands. It also moved above the Ichimoku cloud, which is a bullish sign. At the same time, the Stochastic oscillator moved to the overbought level.
Therefore, there is a likelihood that the pair will likely maintain the bullish trend ahead and after the UK GDP data. If this is true, the next key level to watch will be 1.3900, which is an important psychological level.
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