UK Q4 GDP Recap
UK GDP Q4 Y/Y: –6.5% vs Exp. –8.1% (Prior –8.9%) – Q/Q: 1.0% vs Exp. 0.5% (Prior 4.1%)
UK GDP for the fourth quarter came in firmly above expectations at 1% (Exp. 0.5%), which saw the yearly rate at -6.5%, against the consensus of -8.1%. While the GDP data has printed notably better than expected, this is not entirely a surprise, given last week’s BoE monetary policy report, in which the central bank stated that Q4 GDP was materially better than their initial forecasts. In turn, the Pound has seen a very muted reaction to the data with GBP/USD continuing to hover around the 1.38 handle. Going forward, the vaccine rollout will remain among the key drivers for the Pound. On the technical front, upside risks remain for GBP/USD, although, while the pair has eased a touch from the mid-1.38s, dips are likely to be bought with support situated 1.3750-60 and the 20DMA at 1.3708.
GBP/USD Chart: Daily Time Frame
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EUR/GBP Remains Bearish Below 0.8860
EUR/GBP: The cross has struggled to break through key support at 0.8746 (61.8% fibonnaci fib) and thus has found some slight reprieve from its recent sell off. However, the EUR/GBP remains bearish below 0.8860 and thus I remain biased to fading rallies in the cross. As I mentioned last month, the vaccine trade is in full swing, alongside this, with the BoE among the first central banks to talk about tapering QE, GBP is likely to remain underpinned.
EUR/GBP Chart: Daily Time Frame
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