US Economy's Fairytale: Q4 GDP Surges by 3.3%, Defying High Rates and Falling Inflation

National Bank of Romania Maintains Rates, Eyes Inflation Outlook
  • US GDP rises 3.3% (annualized) in Q4
  • A fairytale outcome for the US economy
  • GBPUSD drifts lower

US economic data continues to point to an economy that’s doing very well despite the various headwinds including very high interest rates.

GDP data for the fourth quarter easily exceeded expectations, rising 3.3% on an annualized basis, adding to the increasing view that the US could be heading for a fairytale scenario, not just a soft landing.

We’ve spoken a lot about resilence in the US economy over the last couple of years but that the economy can continue to show such strength and low unemployment with interest rates so high and inflation falling back toward target is unbelievable.

 

Cable edges lower after failing again at 1.28

The pound has repeatedly tested 1.28 against the dollar over the last couple of months and despite the occasional breach, it’s failed to significantly break higher.

 

GBPUSD Daily

Source – OANDA

It broke below a rising trendline last week, further signaling that the trend is weakening, amid divergence between price and the MACD. It’s now tested those highs again – and the trend line – and failed which could be another suggestion that the rally is running on fumes.

A move below 1.26, the low of the last month, would further back this up and could trigger a sharper decline in the pair.

National Bank of Romania Maintains Rates, Eyes Inflation Outlook

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.