On a quarterly basis, GDP contracted for the first time in about seven years. In addition to GDP, manufacturing production declined 0.2% in June, also missing the estimate for a decline of 0.1%. The all around disappointing figures led to a fall in the British pound against all of its major counterparts. GBP/USD caught a bid from support that has held the pair higher on a few attempts in the month thus far.
However, the pair certainly looks like it is ready to extend losses to a fresh multi-year low. Technical Analysis It became apparent in the second half of the week that GBP/USD was developing a bearish flag pattern. In fact, the pair seemed to hover around the breakout point for longer than what is typical. So far, this area contained the immediate reaction following the data release.
I do expect that we break below this support considering the broader trend and momentum. The session ahead is not likely to have a lot of volatility considering the light economic calendar . The next important release is producer price index figures from the US. Perhaps a catalyst is not in place for a break today, but I expect that if the pair gets below support, it might accompany a quick move to the 1.2000 handle.
Disappointing UK data has put pressure on Sterling. Support at 1.2090 has held the pair higher in the session thus far.
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