UK economic growth will 'grind to a halt' and 10% inflation on the way

Sky News has reported that the British Chambers of Commerce says UK economic growth will 'grind to a halt and 10% inflation on the way.
''The business group downgraded its 2022 growth forecast from 3.6% to 3.5%, and said inflation would reach 10% in the last quarter - far higher than average wage rises.''

The news agency states that this follows another bleak warning this week from the OECD that Britain's growth in 2023 will be the worst of nearly all the G20 countries.

''The bleak outlook follows a warning from one of the world's leading economic authorities that Britain's growth next year will be worse than any G20 country except Russia.

There will be no GDP expansion at all in 2023, according to the OECD (Organisation for Economic Co-operation and Development).

The group said the UK was threatened by rising interest rates and taxes, as well as the high inflation that's leading to surging petrol prices and energy costs.''

The article had little impact on the pound initially, but it will do sentiment no favours amid an already pessimistic outlook for not only the UK growth story but the wider macro picture on the whole. The sour mood has been supporting the greenback in the mid-week trade. 

Sometime after the news started to circulate, the pound started to come off as illustrated below.

Meanwhile, the Bank of England is continuing its gradual tightening of monetary policy but analysts at Commerzbank argue that it is likely to act less restrictively than expected by the market. ''The pound should suffer increasingly from this. Moreover, the EUR should benefit from the ECB's interest rate hikes from the summer onward. We, therefore, see EUR-GBP higher until the end of the year.''

GBP/USD pressured

The price is dipping at the time of writing as illustrated in the five-minute chart above. 

Daily, the price will be in for a beating if it breaks below the prior support and lows near 1.2530 as there is a price imbalance that could be exploited by the bears to 1.2334 prior lows.