GBP Slides on Fresh GDP Drop

UK GDP Sinks in OctoberThe British Pound has come under fresh selling pressure today on the back of weaker-than-forecast GDP data this morning. October GDP printed -0.3%, down from 0.2% prior and below the -0.1% the market was looking for. On the back of a 0% quarterly reading over Q3, October’s data is a worrying start to the Q4 season and shines a light once again on recession risks in the UK. The BOE has previously forecast the UK economy to grow by 0.1% this quarter, though even this forecast now looks in peril after today’s data.BOE in FocusThe disappointing GDP figure comes just a day ahead of the December BOE tomorrow and will certainly present a good argument against any residual hawkish sentiment. Indeed, the market widely expects the BOE to hold rates unchanged tomorrow. However, the bigger focus on the back of this data will be the bank’s forward guidance and whether members now signal likely cuts coming in 2024.Dovish BOE Risks GrowingWith inflation and wages growth declining steadily, domestic demand falling and activity slowing sharply, the case for cuts is becoming more convincing. While the BOE’s core message might not be one of signalling cuts yet, traders will certainly be looking for clues in the voting and the minutes that support for easing might be growing which, if seen, should see GBP sharply lower post-meeting.Technical ViewsGBPUSDThe rally in GBPUSD saw the market stalling into the 1.2659 level. Price is now correcting lower within the bull channel and is fast approaching a test of the channel lows and the 1.2437 level. This is a major support area for the pair and a break lower here will be firmly bearish, opening the way for a test of 1.2171 next.