Pound Sterling (GBP) is down 0.3% againt the US Dollar (USD) and trading heavily in response to the release of weaker than expected data including an unexpected contraction in monthly GDP, a worrisome decline in industrial production, and a wider than expected trade deficit, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Multi-month bull trend is being threatened

"The releases will inform BoE policymakers’ discussions ahead of the August 7 meeting. The central bank will also release fresh forecasts along with its next policy decision. The short-term rates market is already pricing significant near -term easing, with over 50bpts by year end and a cumulative 75bpts by next June."

"The multi-month bull trend is being threatened as GBP/USD approaches critical medium-term support at the 50 day MA (1.3497). The RSI has also drifted below 50, suggesting that near-term momentum is starting to lean bearish. We look to near-term support at 1.3500 and resistance above 1.3600."