GBPUSD Consolidating After Tepid Q1 UK Growth Confirmed
GBPUSD News and Talking Points
- The UK economy barely expanded in the first quarter of 2018.
The IG Client Sentiment Report shows that traders are just under 69% long GBPUSD – a bearish contrarian signal - although recent changes suggest GBPUSD may trend higher.
Sterling Struggles as Weak UK Growth Confirmed
The second look at UK Q1 GDP confirmed preliminary readings that the economy grew by a miserly 0.1% in the first quarter as manufacturing and consumer-facing services faltered.
According to ONS Head of GDP Rob Kent-Smith:“Overall, the economy performed poorly in the first quarter with manufacturing growth slowing and weak consumer-facing services. Oil and gas bounced back strongly, however, following the shutdown of the Forties pipeline at the end of last year”. He added “while there was some evidence of the poor weather hitting construction and high street shopping, this was offset to an extent by increased energy supply and online sales.”
GBPUSD is trying to move higher after hitting a five-month low around 1.3300 on Wednesday but the US dollar remains firm, despite US Treasury yields dipping over the last week. The US Treasury auctioned $99 billion of two-, five- and seven-year bonds this week and the market may well have forced up yields in the last two- to three-week to get cheaper paper.
If 1.33018 fails to hold, the market will look to the 1.32210 low made on November 28 as the first level of support ahead of the October 6 low of 1.30272. On the upside, 1.34581 should provide initial resistance ahead of 1.35450.
GBPUSD Daily Price Chart (September 25, 2017 – May 25, 2018)
--- Written by Nick Cawley, Analyst
To contact Nick, email him at firstname.lastname@example.org
Follow Nick on Twitter @nickcawley1
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.