The EUR/GBP pair is showing strength in Friday’s Asian session, trading at 0.8435. Despite a bearish sentiment below the 100-period EMA, the RSI indicator suggests potential upside. The immediate resistance level is at 0.8440, with 0.8417 as the initial support.
In the upcoming Eurozone GDP data for Q2, expected to grow by 0.3% QoQ and 0.6% YoY, will be closely monitored. The 4-hour chart shows a negative outlook for EUR/GBP, but with a possibility of further upside as RSI trends higher.
The key levels to watch are 0.8440 as resistance and 0.8417 as support. A break above 0.8457 could lead to a rally towards 0.8500, while a drop below 0.8400-0.8405 may signal further downside towards 0.8383.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.