GBP/USD is waiting for the next hammer to fall
- GBP/USD is trading above 1.2900, recovering from the lows.
- The Brexit impasse continues and the US GDP is set to shine.
- The technical picture is decidedly bearish for the pair.
GBP/USD recaptured the 1.2900 handle after hitting a two-month low of 1.2865 on Thursday. The central downward driver is USD strength. The US economy outshines the rest of the world with upbeat data. The latest release was the Durable Goods Orders for March which beat expectations on all measures.
The encouraging data raises expectations for the all-important GDP release for Q1 2019 due later today. Official expectations stand at an OK level of 2.1% annualized, but markets are probably looking for higher numbers after yesterday’s figures. The composition of growth also matters, with personal consumption standing out.
In the UK, things are moving slowly. There has been no breakthrough in talks between the government and the opposition, but negotiations continue, contrary to reports that they are on the verge of collapse. Speculation that UK PM Theresa May will bring about another vote on the accord also came to an end after the government set out the business for next week, and it does include such a motion.
Time is passing by without any developments, confirming that the UK will participate in the European Parliament elections in late May. The government wanted to avoid it.
UK High Street Lending beat expectations with 40K, but GBP/USD did not respond to the figure. The focus is on US GDP.
GBP/USD Technical Analysis
is trading below the 50, 100, and 200 Simple Moving Averages on the four-hour chart and Momentum remains to the downside. Moreover, the Relative Strength Index recaptured the 30 levels, exiting oversold conditions. The graphs show a clear bias to the downside.
Initial support awaits at 1.2865, the fresh two-month low. Further down, 1.2830 was a support line in early February. It is followed by 1.2775 that was the low point that month. 1.2675 is next.
Resistance awaits at 1.2920 that held cable down earlier in the day. 1.2960 was the low point in March and a swing high earlier this week. 1.3020 held the pair down beforehand.