GBP/USD Forecast: turns bearish for the near-term, US macro data in focus
|The US Dollar gained further during Asian session on Friday and built on overnight recovery move led by upbeat US initial jobless claims data. The US weekly jobless claims rose less than expected and continued reflecting the underlying strength in the labor market, reviving hopes that the economy might rebound strongly in the second-quarter. The greenback upside momentum, however, was limited by a larger-than-expected rise in the trade deficit.
Today's US economic docket features the preliminary (second estimate) US GDP print for the first quarter, which is expected to be revised higher and show a growth of 0.9% q-o-q. Also in focus would be the release of Durable Goods Orders and revised UoM Consumer Sentiment Index.
The pair extended its reversal move from yearly tops and was fall was influenced by Thursday's dismal release of UK GDP growth, showing that the UK economy slowed more sharply than previously estimated in the first quarter. According to the revised estimate, the economy expanded at a tepid rate of 0.2% in the first quarter, weaker than 0.3% estimated earlier and much weaker than 0.7% growth recorded in Q4 2016. There are no macroeconomic data due for release from UK today and hence, the USD price-dynamics would remain an exclusive driver of the pair's movement on the last trading day of the week.
Technically, the pair has broken below a short-term ascending trend-channel and hence, now seems vulnerable to extend its near-term corrective slide. Currently trading marginally below the 1.2900 handle, the pair is likely to find immediate support near 1.2850-45 region, below which the downslide should get extended towards the 1.2800 handle en-route a major horizontal support near 1.2770-65 area.
Meanwhile, any recovery attempts might now confront resistance at the ascending trend-channel support break-point, turned resistance, near 1.2920 region. Any subsequent recovery beyond this immediate hurdle might now be capped at 1.2950 horizontal level.
The pair prolonged its consolidative phase and oscillated within the weekly trading range, forming a rectangular chart pattern on short-term charts. Hence, it would be prudent to wait for a decisive break through the trading range before committing to the pair's next leg of directional move.
Weekly lows near 1.1165-60 zone, also coinciding with 23.6% Fibonacci retracement level of 1.0839-1.1268 recent up-move, should continue to act as immediate support. A convincing break below the said support could trigger a corrective slide towards 38.2% Fibonacci retracement level support near the 1.1100 handle.
On the flip side, momentum above 1.1220 level could lift the pair beyond 1.1240 intermediate resistance towards testing the trading range resistance near 1.1265-70 region. A clear break through this important hurdle should now lift the pair back towards Nov. 2016 swing high resistance near the 1.1300 handle.
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