GBP/USD Forecast: stays below 1.30 mark ahead of UK GDP revision

Haresh Menghani FXStreet

The US Dollar extended overnight weakness led by minutes of the Federal Reserve’s latest monetary policy meeting and has now dropped back closer to six month lows touched earlier this week. The minutes revealed general consensus to continue with the path of gradual increases in the federal funds rate. The minutes also showed officials broadly agreed on a tentative plan to gradually shrink the Fed's massive balance sheet this year. The hawkish outlook, however, failed to lift the greenback as there was nothing new in the minutes that could provide any clues over the timing of future rate-hikes.

GBP/USD

On Wednesday, the pair initially edged lower and printed a fresh weekly low near 1.2925 region. Broad based US Dollar weakness helped the pair to recover all its losses and finally settle with minor gains. The pair built on yesterday's recovery move during Asian session on Thursday and inched back closer to the key 1.30 psychological mark as focus shifts to today's release of the revised UK Q1 GDP estimate. From the US, the release of trade balance, wholesale inventories and weekly jobless claims are due for release during early NA session.

Technically, nothing has changed and hence, it remains to be seen if the pair is able to decisively move back above the 1.30 handle. On a sustained move above the said handle has the potential to lift the pair back towards multi-month highs resistance near 1.3040-45 region, above which the pair seems all set to aim towards testing a short-term ascending trend-channel resistance near 1.3075-80 region. With the UK general elections just two-week away from now, the trend-channel resistance might now cap any further up-move.

On the downside, weakness back below mid-1.2900s would now turn the pair vulnerable to break below weekly lows support near 1.2925 level and head towards testing the trend-channel support near the 1.2900 handle. A convincing break below the channel support now seems to open room for additional near-term corrective slide, initially towards 1.2850-45 intermediate support and eventually to sub-1.2800 level, to 1.2775-70 support area.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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