British Pound Trades Mildly Bullish Amid Plummeting Global Equities

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The British pound traded on a bullish sentiment on Friday following a better-than-expected GDP data release. On the other hand, the US dollar lost some gains from the post-CPI positive sentiment, albeit only mildly.

Last week, the Japanese yen, followed by the euro and dollar, had the worst trading session among the top eight currencies. The Aussie had the strongest last week, followed by Kiwi and Sterling. This performance in the currencies market came amid a crashing global equities market.

The equities market in Europe also traded lower on Friday, with the FTSE, DAX, CAC, and the Germany 10-year yield trading down by -0.67%, -0.27%, -1.10%, and -0.025, respectively. In Asia, the Hong Kong HSI and the China Shanghai SSE fell by -0.07% and -0.66%, respectively. Notably, the Japanese markets remained closed on Friday as the country went on holiday.

Meanwhile, the NIESR forecasted a growth rate of 1% for the UK’s GDP in Q1 2022. The research institute noted that the economic drawdown of the Omicron Coronavirus variant was less severe than the last two waves. NIESR argued that the -0.2% drop in the forded in December was equally better than its consensus forecast, which bolstered the possibility of positive reading in January.

Commenting on the recent development, Principal Economist at NIESR, Rory Macqueen, noted:

“The economic impact of Omicron was far smaller than that of either of the two previous major waves of Covid-19: a mere 0.2 percent fall in December was even stronger than consensus forecasts, but in line with NIESR’s January GDP tracker, suggesting the possibility of positive reading in January. Unsurprisingly, retail and hospitality contributed the most to December’s fall, with the healthcare sector providing the largest positive contribution.”

British Pound and US Dollar Pair Remains Range-Bound

The recent developments suggest that the GBP/USD pair could remain in its range-bound trading pattern in the medium-term amid strengthening hawkish stances adopted by several global central banks.