GBPUSD gains bids to offset BoE-induced losses following optimistic UK GDP and activity figures.
GBPUSD accepts offers to retest intraday lows near 1.2500 as the pound bears the brunt of poor UK statistics ahead of Friday’s London open. As a result, the Cable pair fails to applaud the US Dollar’s consolidation of the largest daily gain in two months ahead of critical US data. However, it is worth remembering that US inflation indications and risk catalysts are still capable of reviving the Cable bearish.
According to preliminary estimates, UK Q1 GDP matches pessimistic market projections on a QoQ and YoY basis.
Nonetheless, first readings of the UK’s first quarter (Q1) GDP show 0.1% QoQ increase vs 0.1% predicted and past readouts. However, the monthly GDP for March fell -0.3% compared to 0.0% market projections and previous figures. Furthermore, the British Manufacturing and Industrial Production figures for March were released. Because of the generally negative British data, the US Dollar Index (DXY) fell from a weekly high of 102.00 to 102.00 by press time, failing to put a floor under the Cable pair.
The prospect of averting a US default, as well as the absence of big disappointment from banks, favor a corrective pullback.
Nonetheless, the US dollar index vs the six major currencies had its best day in two months the day before. However, predictions of a resurgence in China’s inflation data and prospects of seeing milder US inflation hints combine with a lack of new disappointment from the US banking and debt-ceiling fronts to support the DXY’s latest corrective fall.
It is worth mentioning that the recent weakening in UK statistics joins Bank of England (BOE)o Governor Andrew Bailey’s forecasts for a dramatic drop in inflation to weigh on GBPUSD pricing.
In the future, the In the next months, the first readings of the University of Michigan’s (UoM) Consumer Sentiment Index (CSI) for May, as well as the UoM 5-year Consumer Inflation Expectations for the same month, will be vital to keep an eye on for clear guidance. If the US inflation indicators meet the pessimistic estimates, the GBPUSD may have another chance to recover, if risk appetite remains balanced.
GBPUSD Technical Outlook
Unless the GBPUSD price moves above a two-month-old prior support line, which is now at 1.2540 at the time of writing, buyers will remain on the sidelines. The Cable pair’s new selling requires confirmation from an upward-sloping trend line from late March, preferably around the 1.2500 round figure.
