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The UK Economy is Rapidly Slowing Down

8/15/2022 12:19 PM

Due to a decline in the British currency, the GBP/USD pair is correcting, trading around 1.2115.

The pound failed to continue active growth after the publication of poor macroeconomic data on Friday: the UK's gross domestic product (GDP) in July fell by 0.6% compared to the previous month, although in June, it showed a positive trend of 0.4%. The indicator declined by 0.1% in the second quarter, slowing down the value to 2.9% YoY from 8.7% a quarter earlier. Also to GDP, a significant weakening was recorded in the leading sectors of the economy: the volume of industrial production fell by 0.9%, and the volume of production in the manufacturing industry decreased by 1.6%. However, this is the first quarter when GDP is negative, which means formally a recession in the UK economy is not yet.

The US dollar rose to 106.000 in the USD Index and almost reached it. The reason for the local positive dynamics was data from the University of Michigan, according to which the consumer expectations index in August rose to 54.9 points from 47.3 points in July, and the consumer sentiment index rose to 55.1 points from 51.6 points a month earlier. This week, several statements are expected from officials of the regional Federal Reserve Banks, expressing their position on the future course of US monetary policy, and until then, investors will prefer not to make new transactions with the dollar.

The pair continues to trade within the global downward channel, coming close to the resistance line, indicator Alligator's EMA oscillation range expands upwards, and the histogram of the AO oscillator forms rising bars in the buy zone.

Resistance levels: 1.2240, 1.2630. | Support levels: 1.2048, 1.1761.

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