GBP/USD: Rally stalls ahead of the UK GDP release
- The GBP/USD rally seems to have stalled amid broad-based USD rally.
- All eyes on the UK GDP, scheduled for release at 08:30 GMT.
The cable's retreat from 1.4244 (March 27 high) to 1.4060 (Asian session low) suggests the rally from the March 1 low of 1.3712 may have run out of steam.
The decline could be associated with the broad-based USD rally, possibly fuelled by quarter end flows, rising USD borrowing costs (as represented by Libor-OIS spread), and an upward revision of the US Q4 GDP.
Meanwhile, GBP positive news has been largely ignored:
- UK's Thornberry said the Labor party will likely vote for the final Brexit deal, thus ensuring a smooth exit from the EU
- Gfk UK consumer confidence rose to a 10-month high of -7 from -10 in February.
That said, the GBP/USD may regain bid tone if the UK Q4 GDP, due at 08:30 GMT, is revised upwards and is accompanied by an upbeat service sector performance. Also, US personal spending report scheduled for release in the US session could influence the GBP/USD pair.
GBP/USD Technical Levels
Currently, the spot is trading at 1.4077. A break above 1.4102 (hourly 200-MA) would mean the pullback from the recent high of 1.4245 has ended and could yield re-test of 1.4156 (100-hour MA) 1.42 (resistance as per the hourly chart).
Meanwhile, on the downside, acceptance below 1.4066 (March 27 low) would shift attention to the 1.3976 (ascending 21-day MA). A close lower would crowd out bulls trapper on the wrong side of the market, thus leading to a deeper sell-off to 1.3712 (March 1 low).
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
