GBPJPY Stays Volatile, Looks For Direction

Surprising UK GDP report

On the macro front, figures from the Office for National Statistics yesterday revealed that the economy grew slightly in the most recent quarter, contrary to an earlier prediction of a little fall.

After revising its initial estimate for a 0.1% loss, the ONS said that UK GDP was projected to have climbed by 0.2% in the second quarter.

It was noticed that the health industries, as well as the wholesale and retail commerce, remained sluggish. However, services production was anticipated to have climbed by 0.2%, showing “an easing” in the output of professional, scientific, and technical activities as well as information and communication.

Prior to this, the ONS assessed that services production had decreased by 0.4% as a result of a decline in Covid-19 activity.

Richard Hunter, head of markets at Interactive Investor, said: “In what has been a calamitous week for the UK economy, there was a rare glimmer of hope as the GDP reading edged into positive territory for the second quarter unexpectedly, defying expectations of a recession – for now.

Short-term outlook neutral

Sterling is now testing the key resistance of previous lows at around 161. Should bulls push the price above that level, the immediate trend might change to bullish, and sentiment could improve.

In that scenario, the following target/resistance might be at today’s highs near 162.

On the downside, the support is seen at the 200-day moving average at around 160.30 and if not held, the price could fall back to today’s lows near 159.50.