GBPUSD consolidates its losses after recording the worst week in years. The British PM takes another step towards Brexit, via the WAB, despite criticism from the ex-conservative member. Fears of the “Valentine’s Day Massacre” and the US warning weigh on optimism. Here is the GBPUSD Fundamental Analysis of 23 December, 2019.
23 December, 2019 | AtoZ Markets – GBPUSD traders seem to ignore the drop in UK political optimism. GBPUSD pauses the dropping to 1.3010 before the London open on Monday.
GBPUSD Fundamental Analysis – 23 December 2019
British PM Boris Johnson has successfully managed to get his EU Withdrawal Agreement Bill (WAB) passed into the new Parliament. However, the House of Commons has yet to pass the bill but will have fewer judgments given the majority of Tories.
Despite this, a veteran former Conservative MP, Ken Clarke, criticized British Prime Minister Johnson for simply promoting ideas when he lacked the main details of Brexit. Clarke also said that the Conservative leader lacks power in his government. Besides, news of the Dominic Cummings massacre on Valentine’s Day, as the UK Express said, also haunts British political observers.
US President Donald Trump is warning not to include climate change issues in his trade talks. It seems like a sudden turnaround on the part of British PM Johnson’s friend who praised the Conservative leader several times before the general election.
On the other hand, USD posted wide declines. The US-China phase-one deal failed to overcome China’s warning to the US to not interfere in internal affairs. The holiday mood is likely to limit market movements with the emptiness of the British calendar. That adds a burden on traders of the pair.
Solid US Economic Growth
The dollar held steady at the start of a holiday-thinned week on Monday. US data showed solid economic growth. The pound rebounded slightly after suffering its biggest weekly drop in three years.
A batch of economic data showed that the US economy already in its longest expansion in history. It seems to have maintained the moderate pace of growth at the end of the year, supported by a strong labour market.
The gross domestic product raised at an annualized rate of 2.1%, said the Department of Commerce in its third estimate of third-quarter GDP. That was unrevised from November’s estimate. Ayako Sera, market economist at the Sumitomo Mitsui Trust Bank, said:
“The US economy seems to have stopped slowing. There is no indication that it will be hitting a recession.”
Investors were spooked by fears about the possibility of a US recession. The US yield curve reversed, which has historically been one of the most reliable signs of a US downturn.
Separate data has shown that consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.4% last month. Households had increased their purchases of motor vehicles and their spending on health.
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