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Old 10-08-2023, 11:41
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Default GBP/USD on Edge Before US Inflation Data and UK-China Sanctions

GBP/USD remains cautious around 1.2715-20 ahead of Thursdayís London session, as investors tread carefully before the release of US inflation figures for July. Additionally, the Pound faces resistance due to reports of the UK considering restrictions on British investment in Chinese tech firms. Meanwhile, concerns about a potential British recession and looming higher interest rates in London are also testing the Cable pairís stability.

A recent report by the Financial Times (FT) suggests that UK Prime Minister Rishi Sunak is contemplating measures to limit outbound investment in the Chinese tech sector, including areas like artificial intelligence, chips, and quantum computing. This news gains traction as Sunak seeks support within the political sphere following disappointing by-election results.

Furthermore, the UKís prominent think tank, the National Institute of Economic and Social Research (NIESR), projects that British economic output wonít recover to pre-pandemic levels until Q3 2024. The NIESR also suggests a 60% chance of the government facing a recession, while anticipating that UK inflation will remain above the Bank of Englandís 2.0% target for the next four years. This could drive the Bank of England towards more hawkish actions to defend the British Pound.

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