GBP Price Falls After Dire Warnings For UK Economy After Brexit
GBP price, news and analysis:
- GBPUSD is dropping despite a weak USD following the Fed chair’s more dovish stance, reacting to downbeat forecasts for the UK economy post-Brexit.
- EURGBP has risen on the warnings from the UK Treasury and the Bank of England, suggesting that not all the bad news has yet been priced in.
GBP Price Weakened by Grim Predictions for UK Economy
The British Pound has dropped back after Wednesday’s pessimistic economic forecasts from both the Bank of England and the UK Treasury, suggesting that UK economic weakness post-Brexit has not yet been fully priced in to the GBPUSD pair or GBP crosses.
The USD price was hit Wednesday when Federal Reserve Chair Jerome Powell suggested the Fed may be nearing the end of its rate-hiking cycle, although a further increase in US interest rates next month remains likely. As a result, GBPUSD gained ground but lost almost all of it in early European trading Thursday.
GBPUSD Price Chart, 30-Minute Timeframe (November 26-29, 2018)
That GBP weakness was also reflected in EURGBP, with the cross jumping despite allegations from Brexit enthusiasts that the predictions were merely part of “Project Fear” designed by the anti-Brexit camp to weaken Brexit sentiment.
EURGBP Price Chart, 30-Minute Timeframe (November 26-29, 2018)
The GBP price was hit too by suggestions that the Bank of England is most unlikely to increase UK interest rates given that it sees economic weakness ahead. However, some comfort was taken from BoE predictions that UK banks would survive a downturn, with all passing the BoE’s stress tests comfortably.
As for the future, two data points released just after midnight Thursday/Friday local time could be important for GBP. Both the GfK consumer confidence figure and the Lloyds Business Barometer for November are released, with analysts expecting confidence to have fallen further – another potential negative for the Pound.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.