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Pound holds near 1.3500 as UK factory output counters stronger GDP
GBP traded a few pips below 1.3500 after UK GDP held at 0.6% in Q2 and June industrial production fell 0.2%, while Fed hike odds for September eased.
The British pound hovered just below 1.3500 against the US dollar in early London trade, moving little as mixed UK economic signals offset lingering support for the USD.
UK data showed second quarter growth holding steady at 0.6% and June monthly GDP accelerating to 0.3%, beating expectations. However, factory activity weakened, with industrial production contracting 0.2% in June versus expectations of 0.1% growth, and manufacturing production falling 0.5%, undercutting optimism.
On the US side, the dollar remained capped as investors scaled back expectations for Fed tightening after softer inflation and labor-market data, including recent CPI and last week’s nonfarm payrolls report. CME’s FedWatch tool put the odds of a quarter-point rate hike in September at 40%, down from 54% the prior week.
Technically, Scotiabank highlighted potential near-term resistance around 1.3600 and support in the mid to lower 1.34s, suggesting a range-bound outlook between 1.3450 and 1.3550 as markets wait for further UK releases.