The British pound led losses on Friday against the US dollar among the major currencies. GBPUSD dropped 104 pips from its intraday high of 1.2927. It finished the week at 1.2828 down 0.56% from its opening price at 1.2904.
Lately, market participants seemed little affected by economic data. The biggest movers on the pound had been news on politics. Friday was different, though. The pound gave up ground to most of its counterparts following forex news which hinted that the UK economy may soon be headed for a contraction.
The manufacturing and services PMIs for November both missed forecasts at 48.3 and 48.6 versus the market consensus at 48.8 and 50.1, respectively. These are surveys to executives in the two industries and are considered to be leading indicators of economic health. Numbers below 50.0 are interpreted to mean that the economy may contract soon.
With this said, forex traders will likely be paying more attention to forex news pertaining to the economic health of the British economy. For today, at 11:00 am GMT, the CBI Realized Sales report is on tap and it is expected to print at -10. A lower-than-expected figure could be bearish for the pound as it would mean that consumer spending has contracted more than expected this month.
GBPUSD has been trading within a 200-pip range since the last week of October. If economic data disappoints or there are red flags on the Conservatives campaign heading into the general elections, GBPUSD could drop to test support at 1.2780. On the other hand, better-than-expected data could spark a rally in the currency pair on its way to resistance at 1.2980.Download our latest quarterly market outlookfor our longer-term trade ideas.
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