The GBP/USD fell for the third consecutive session on Thursday to an intraday low of 1.5369 after the US Q2 GDP was revised higher than expected. The upward revision pushed the 2-yr treasury yield above 0.7% and USD higher across the board. The spot closed at 1.5401; its lowest closing since July 10th.
Focus on UK GDP
The second estimate of the UK Q2 GDP due for release today is likely to remain unchanged at 2.6%yoy and 0.7%qoq. A better-than-expected figure could push the spot above its 100-DMA at 1.5475. Meanwhile, a weak or unchanged figure is likely to keep doors open for a renewed sell-off towards its 200-DMA located at 1.5367.
A probability of a break below 200-DMA at 1.5367 is high, especially if the US personal spending for July prints higher than the estimate of 0.4%. Personal income is seen rising 0.4% as well. So far this week, the US data – durable goods orders and Q2 GDP - has surprised on the positive side. Consequently, the USD could be bid in anticipation of an upbeat personal spending report. A positive figure would be an icing on the cake and push 2-yr treasury yield above 0.75% and lead to broad based USD strength.
Technicals – Bearish below 1.5424
The spot is currently trading around 1.5430. Sterling’s daily close below 1.5424 (Aug 7 low) has opened doors for re-test of 1.5330. A daily close below 1.5330 would mean the downtrend from the June high of 1.5930 has resumed. However, loss of downside momentum due to oversold conditions on the intraday charts could lead to a sideways movement with offers seen above 1.5424. A break below 1.5409 (38.2% of Apr-June rally) could push the pair lower to its 200-DMA at 1.5367. On the higher side, 1.5460 (61.8% of June rally) – 1.5475 (100-DMA) could act as a stiff resistance.
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