British pound wavers after UK avoids double dip recession

The British pound declined today after the Office of National Statistics (ONS) published the latest UK GDP data. The numbers showed that the country’s economy dropped by 9.9% in 2020, the worst performance in 300 years. The economy expanded by 1.0% in the fourth quarter, leading to an annual contraction of 7.8%. The two figures were better than the expected increase of 0.5% and the 8.1% contraction that analysts were expecting. Further data revealed that UK manufacturing production rose by 0.3% while the industrial production rose by 0.2%. Construction output fell by 2.9%.

The Swiss franc declined against the US dollar today after Switzerland published relatively mild inflation numbers. The data showed that the consumer price index (CPI) rose by 0.1% in January after dropping by 0.1% in the previous month. This led to an annualised decline of 0.1%, a better performance than the previous decline of 0.8%. These numbers are still substantially below the 2% target of the Swiss National Bank (SNB). This means that the bank will take longer than previously expected to hike interest rates considering that the unemployment rate is also rising.

The price of crude oil is wavering near its high since January last year. This trend is mostly because of the rising expectations that demand will rise later this year. In its monthly report yesterday, the Energy Information Administration (EIA) said that demand will outstrip supply in the second half of the year. In another report, OPEC reduced its non-OPEC production target by 200,000 barrels per day to 96.4 million. Still, there are concerns that US producers will now ramp-up production to take advantage of the rising prices.

EUR/USD

The EUR/USD pair dropped to an intraday low of 1.2100, which was the lowest level since Wednesday this week. On the hourly chart, the pair managed to break-out below the ascending channel. Also, the price managed to move below the 25-day and 15-day exponential moving averages while the bearish divergence shown by the RSI has continued. The pair may continue falling during the American session as traders target the next support at 1.2050.

GBP/USD

The GBP/USD tilted lower today after the mixed economic data from the United Kingdom. It is trading at 1.3787, which is a few pips above the intraday low of 1.3776. On the four-hour chart, this price is slightly below the 23.6% Fibonacci retracement level. It has also moved between the lower and the middle line of the Bollinger Bands. The signal and histogram of the MACD have also moved below the neutral line. Therefore, the pair may continue falling as bears attempt to test the 38.2% retracement at 1.3753.

XBR/USD

The XBR/USD declined to an intraday low of 60.00 today. On the four-hour chart, the price seems to have found a top after it reached a high of 61.43. Still, it is above the 50-day and 25-day moving averages while the RSI and MACD are showing signs of a bearish divergence. Therefore, the pair may continue falling in the near term as bears attempt to move below 60.