British Pound trades with caution ahead of UK monthly GDP data
The British Pound (GBP) trades cautiously against its major currency peers during the European trading session on Thursday, down 0.1% to near 1.3350 against the US Dollar (USD). The British currency is marginally down ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for April, which will be released on Friday.
The Office for National Statistics (ONS) is expected to report that the GDP growth contracted by 0.1% after expanding 0.3% in March. The scenario of UK economic contraction would undermine expectations of Bank of England (BoE) interest rate hikes despite inflationary pressures remaining higher in the wake of elevated energy prices.
On Friday, investors will also focus on the Manufacturing and Industrial Production data for April, which are expected to have remained mixed. Month-on-Month Industrial Production is estimated to have grown by 0.1% after declining 0.2% in April. In the same period, the Manufacturing Production is seen contracting at a 0.2% pace.
Meanwhile, fears of the United States (US)-Iran ceasefire collapse have also dampened the appeal of riskier currencies, resulting in an improvement in the US Dollar’s safe-haven demand. In the European trade, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has turned slightly positive to near 100.12 after recovering early losses.
Investors doubt the US-Iran ceasefire would last long, following attacks traded between both nations in the past few days. However, US President Donald Trump has stated that military operations conducted by Washington were a response to Tehran for shooting down the US Apache helicopter, and not a restart of an all-out war, the Wall Street Journal (WSJ) reported.
Next week, the British Pound will be facing high volatility due to a UK data-packed week and the BoE monetary policy announcement.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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