COZfx: NIESR estimated UK GDP to grow 0.8%

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COZforex: For the past trading session, GBP declined 1.02% against the USD and closed at 1.5955, as the latest batch of lackluster domestic economic data spurred doubts on the recovery of the UK economy.

In the UK, an official report showed that industrial production in the nation declined 1.5% in August, defying market expectation for a 0.6% drop and compared to a 1.1% fall seen in the previous month. Similarly, the nation’s manufacturing production unexpectedly fell 0.2% amid August, compared to a 0.3% drop registered in the preceding month.

Another report revealed that UK’s total trade balance registered a deficit of £3.320 billion in August, more than analysts’ expectation for a deficit of £2.050 billion and compared to a £3.449 billion deficit recorded in the earlier month.

Negative sentiment was also fuelled after a report showed that the NIESR GDP estimate of UK rise just 0.8% during the three month ended to September, compared to a 0.9% rise reported in the preceding three months.

However, a survey report from the Bank of England showed that lenders expect a modest increase in lending to businesses in the fourth quarter. The report also found that banks and building societies planned the fastest growth in credit supply to small firms since the second quarter of 2010, thus adding to the UK’s recovery from prolonged stagnation.

In technical analysis, COZforex senior currency strategist Ian • Quigley said, GBP/USD is predicted to find support at 1.5873, and a drop through could take it to the next support line of 1.5816. Meanwhile, the pair is predicted to find its first resistance at 1.6031, and a rise through could take it to the next resistance line of 1.6132.

Investors await the Bank of England’s interest rate and asset purchase decision, which the market expects the central bank to keep it unchanged at 0.5% and £375 billion, respectively, at its October policy meeting.

(COZ forex UK)