GBP/USD trims losses but still headed toward a weekly decline

GBP/USD managed to move off daily lows and trimmed losses. It climbed back above the important 1.3050 area, but it is about to post the third decline in a row. Despite moving off lows downside pressure is still seen in the pair after the price dropped back below the 20-day moving average.

Cable currently trades at 1.3080/85; from the level it had a week ago it is 150 pips lower and 300 pips below Wednesday’s highs.

GBP, the worst

The pound was the worst performer during the week. It dropped sharply on Thursday after the Bank of England announced stimulus measures.

According to Danske Bank analysts, in the UK, “focus continues to be on the economic impact of UK’s EU vote. So far, most post-Brexit survey data have been very weak, indicating that the UK economy is heading for a recession in the second half of the year. This also explains why the Bank of England announced a substantial easing package yesterday”.

Next week, the most important release is the NIESR GDP estimate for July on Tuesday, “which usually is a good indicator for actual GDP growth. It is likely that it will show that economic activity has declined significantly after Brexit in line with the PMI’s for July”, said analysts from Danske.