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The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
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The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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GBPUSD Rally Falters at 1.1600

The GBPUSD exchange rate has seen its recent rally rejected at the 1.1600 level.

With US inflation and the UK GDP growth figures ahead, traders have an opportunity for a swing trend.

GBPUSD – Daily Chart

GBPUSD

GBPUSD is playing with two uptrend support lines and can start to test the lower levels again if the data comes out in favour of the greenback.

The latest US inflation data was released after Federal Reserve Chair Jerome Powell said that rates “have a way to go” before they reach their peak. However, tomorrow’s data is expected to show a dip to 8% from 8.2%, which may not support the USD.

The essential data point could be the UK GDP growth figures on Friday, which is expected to show the country is in a recession. Analysts expect a 3-month average of -0.5% for the economy into the end of September. The year-on-year figure is revised down to 0.9% from 2% previously.

The British economy has been hurtling towards a recession after aggressive rate hikes from the Bank of England. Its Chief Economist has suggested there are more to come.

Huw Pill said: “I think we cannot declare victory against second-round effects, but we are entering a recession. That’s a difficult trade-off environment for monetary policy. “We are meant to manage this trade-off to avoid unnecessary, counterproductive disruptions to the real economy.”

The Bank of England has raised interest rates from 0.25% this year to its current 3% level.

Investment bank JP Morgan warned that the UK economy will be 10% smaller than its pre-covid level when it exits an expected two-year recession.

Last week BoE governor Andrew Bailey warned the UK economy will contract eight quarters from this winter, marking the most prolonged recession in a century.

“Remarkably, the Bank’s projections do not include any fiscal tightening that is to be announced on November 17 (perhaps worth two percent of GDP) and assume fiscal policy will be used to protect households from half of the rise in energy prices that would occur from next April based on the current forward rates,” JP Morgan said.

Traders can play the GBPUSD for a double dose of economic data in the next two days, and we should not be surprised if there is a downside surprise for the British pound.

Last Updated: 10/11/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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