GBPUSD appreciates to new all-time highs at 1.1840

• The pound continues to appreciate and reaches a maximum of 2 months and a half at 1.1840.
• UK GDP contracted less than expected in the third quarter.
• The dollar continues to be pressured by hopes of easing from the Fed.

The GBP has rallied for the second day in a row against a battered dollar, reaching fresh two-week highs at 1.1840. On the weekly chart, the pair is headed for a 4.8% recovery on its best weekly performance in over two years.

UK GDP contracts less than expected in Q3

Preliminary UK Gross Domestic Product has shown a 0.2% contraction in the third quarter, significantly above the market consensus of -0.5% after advancing 0.2% in the previous quarter. In year-on-year terms, the British economy slowed to 2.4% from 4.4%, which is still better than the 2.1% reading expected by market analysts.

Although these figures confirm the Bank of England’s forecast that the country is entering a long recession, the market seems to have welcomed the data, which has allowed the pair to extend its strong two-day rise.

At the other extreme, the US dollar has extended its sell-off, triggered by softer US inflation figures seen on Thursday, which have acted as a tailwind for the pair. The US CPI slowed to an annual rate of 7.7% in October, according to data from the US Bureau of Labor Statistics, well below market expectations of 8% and below the 8.2% reading seen in September.

These data suggest that inflationary pressures may be easing, which has fueled expectations of a dovish shift from the US Federal Reserve in coming months. This has crushed US demand and boosted global stock markets.

In a very thin US calendar, the Michigan Preliminary Consumer Sentiment Index anticipated a sharper-than-expected deterioration in November. Rising prices and concerns about rising interest rates are weighing on consumer confidence.

Technical levels to watch