GBPUSD Pushing Higher on US Dollar Weakness

GBPUSD – Prices, Charts and Analysis

• The prospects for UK growth remain bleak.
• The BoE is concerned that UK inflation will remain stubbornly high.

Anemic growth and persistent inflation will continue to hurt UK households this year, according to the latest blog from the National Institute of Economic and Social Research (NIESR). The NIESR expects official UK fourth quarter GDP, to be released tomorrow at 07:00 GMT, to show minimal to zero economic expansion, while UK growth is likely to remain at or near zero through 2023. And the bad news doesn’t stop this year.

“The current monetary tightening cycle has been aggressive in terms of the pace and magnitude of rate hikes and will likely weigh on output and growth in 2024 given lags in monetary policy transmission. But the annual inflation rates we’ve seen throughout 2022 have made this a necessity.”

All real-time economic data and news can be found at DailyFX Calendar

Bank of England Governor Andrew Bailey will today sit on the Treasury Select Committee (TSC) alongside MPC members Huw Pill, Professor Silvana Tenreyro and Professor Jonathan Haskel. You’ve been asked if the central bank has been behind the curve in fighting inflation. Comments from BoE officials so far suggest that the MPC is still concerned about persistently high inflation and that the UK economy could face an extended period of weakness.

Cable is back above 1.2100, supported by slightly stronger Sterling and weaker US Dollar. GBPUSD dropped below 1.2000 on Tuesday before turning higher above the 200-day moving average. Next resistance level is seen around 1.2200 (50-dma) before 1.2292 comes into view again.

GBPUSD daily chart – February 9, 2023

Charts via TradingView

Retailers increase their long positions

Data from retail traders shows that 57.77% of traders are net long, with the ratio of traders long to short being 1.37 to 1. The number of traders who are net-long is 3.65% lower than yesterday and 45.78% higher than last week, while the number of traders net-short is 7.67% higher than yesterday and 23.56% less than last week.

We tend to be contrarian on sentiment and the fact that traders are net long suggests GBP/USD prices could fall further. Positioning is less net long than yesterday but more net long from last week. The combination of current sentiment and recent changes gives us another clue mixed GBPUSD trading bias.

What is your opinion on the British Pound – bullish or bearish? You can let us know using the form at the bottom of this article or contact the author via Twitter @nickcawley1.