Sterling Consolidates After Fall; GDP Fails to Lift Currency Pair

Sterling moved lower on Thursday and continued to trade under pressure on Friday, following a 25 basis points climb in the U.S. 10-year. The rapid rise in interest rates has boosted the greenback, allowing the interest rate differential to move in favor of the U.S. currency. Sterling was briefly boosted following the UK Q2 GDP data, which was unrevised at +0.7% q/q in second-estimate data, matching expectations but showing a solid increase in net trade and business expenditure. The GDP data followed the release of the UK August Gfk consumer confidence survey, which came in at +7, matching the cycle high after unexpectedly lifting from +4 in July.

The GBP/USD sliced through trend line support created by an upward sloping trend line that connects the lows in July to the lows in August and comes in near 1.55. Support is the July lows near 1.53. Momentum has turned negative with the MACD (moving average convergence divergence) index generating a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal.

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