GBP/USD continues to explore to the downside ahead of UK GDP figures

The GBP/USD is drifting closer towards 1.3350 ahead of Friday's London markets session that sees UK GDP figures to cap off a week that has seen the GBP sag into new lows as confidence in the UK's economic turnaround continues to wane.

Friday's preliminary GDP figures for the first quarter, which drop at 08:30 GMT, are expected to hold the line, and the year-on-year GDP numbers are forecast at 1.2%, in-line with the previous figure. Meanwhile, Total Business Investment for the first quarter is seen contracting slightly, from the previous period's 0.3% to 0.2%.

The thing capping off the Sterling and preventing a meaningful bullish correction in the charts, according to ING analysts, is the widening gap between the FOMC and the Bank of England (BoE). The BoE has been knocked off their trajectory for a rate hike, and the UK's interest rates are likely to stay where they are for the time being. As ING put it, "with consumer’s remaining cautious and borrowing appearing to have fallen substantially, a rate hike over the next few months is certainly not a done deal. As we heard from the BoE’s Vlieghe yesterday, the cost of waiting is not particularly high." 

GBP/USD levels to watch

The technical outlook for the Sterling remains on the bearish side, and as FXStreet's own Valeria Bednarik noted, "in the meantime, the short-term picture remains unchanged, with the risk skewed to the downside, given that in the 4 hours chart, the price is unable to advance beyond its 20 SMA, now around 1.3400, while technical indicators hold within bearish territory, the Momentum heading south after failing to overcome its mid-line, and the RSI hovering below its daily high and currently at 45."

Support levels: 1.3365 1.3330 1.3300   

Resistance levels: 1.3420 1.3455 1.3490