GBP/USD – Wobbly pound breaks below 1.26, U.S GDP hits estimate

GBP/USD has lost ground for a fourth straight day. Currently, GBP/USD is trading at 1.2589, down 0.30% on the day. On the release front, U..S Preliminary GDP came in at 3.1%, matching the forecast. Unemployment claims rose to 215 thousand, just shy of the estimate of 216 thousand. In the U.K., GfK Consumer Sentiment is expected to remain deep in negative territory, with an estimate of -12 points. On Friday,  the U.S. releases key inflation and consumer spending data.

The Bank of England is forecasting weak growth for the economy. Earlier in May, the bank projected growth of 1.5% for 2019 and 1.6% in 2020, and that is on the assumption that the Brexit process goes smoothly. On Thursday, Deputy Governor Dave Ramsden took issue with his MPC colleagues, saying that he is more pessimistic about the economic outlook and believes that growth will be less than the bank’s forecast. Ramsden warned that a no-deal Brexit without a transition period would have “large negative economic effects”. Ramsden added that even if the U.K. crashed out of the EU without a deal, it did not automatically mean that interest rates should be cut.

Inflation in the U.K. has been moving higher. Consumer inflation pushed above the 2% level in April, with a gain of 2.1%. This marked a 4-month high, and is good news for the BoE, which has an inflation target of 2.0%. The upward trend has continued with shop price inflation, which accelerated to 0.8% in May, up from 0.4% in the previous release.

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GBP/USD Fundamentals

Thursday (May 30)

• 8:30 US Preliminary GDP. Estimate 3.1%. Actual 3.1%
  
• 8:30 US Goods Trade Balance. Estimate -72.0B. Actual -72.1B
• 8:30 US Preliminary GDP Price Index. Estimate 0.9%. Actual  0.8%
• 8:30 US Preliminary Wholesale Inventories. Estimate 0.2%. Actual 0.7%
• 8:30 US Unemployment Claims. Estimate 216K. Actual 215K
  
• 10:00 US Pending Home Sales. Estimate 0.9%
• 10:30 US Natural Gas Storage. Estimate 98B
• 11:00 US Crude Oil Inventories. Estimate -0.9M
• 12:00 US FOMC Member Clarida Speaks
• 19:01 British GfK Consumer Confidence. Estimate -12

Friday (May 31)

• 8:30 US Core PCE Price Index. Estimate 0.2%
• 8:30 US Personal Spending. Estimate 0.2%
• 9:45 US Chicago PMI. Estimate 55.1
• 10:00 US Revised UoM Consumer Sentiment. Estimate 102.0

*All release times are DST

*Key events are in bold

GBP/USD for Thursday, May 30, 2019

GBP/USD May 30 at 10:20 DST

Open: 1.2627 High: 1.2641 Low: 1.2586 Close: 1.2586

GBP/USD Technical

GBP/USD showed limited movement in the Asian session. The pair showed movement in both directions in European trade and has edged lower in the North American session

• 1.2615 is providing support
• 1.2723 is the next resistance line
• Current range: 1.2615 to 1.2723

Further levels in both directions:

• Below: 1.2615, 1.2477 and 1.2401
• Above: 1.2723, 1.2841, 1.2910 and 1.3000

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