Pound edges lower, GDP next

The British pound is in negative territory on Thursday. In the North American session, GBP/USD is trading at 1.3760, down 0.29% on the day.

There are no British events on today’s schedule, and predictably, the pound is having a quiet day. The week will end on a busy note, with a data dump out of the UK early on Friday. GDP for May is expected to slow to 1.7% MoM, down from 2.3% in April. The forecast for Manufacturing Production for May is more positive, with a consensus of 1.0%, compared to -0.3% beforehand.

The UK recovery continues to gain traction, and the June PMIs were another indication that the economy is headed in the right direction. The PMIs were all above the 60-level, pointing to strong growth in the manufacturing, services and construction sectors.

The government is keen to completely open up the economy and remove all health restrictions on July 19. The original ‘Freedom Day’, set for June 21, had to be postponed. Prime Minister Boris Johnson says that the move will go ahead, despite a jump in Covid cases, which have jumped to 30,000, the highest level since January. Health officials have warned that scrapping all restrictions could lead to spike in infections, so the government is clearly taking a big risk in moving ahead.

Fed in no rush to taper

There was an air of anticipation ahead of the release of the FOMC minutes on Wednesday, with investors hoping that the minutes would provide some clues as to when the Fed might begin scaling back its bond purchases. In the end, however, the release turned out to be a sleeper, and market reaction was muted. The Fed failed to give any clues as to a timeline for a taper, and most members did not support a tightening of policy. Still, the fact that the Fed is “talking about talking about a taper” can be viewed as a small step towards a tighter policy down the road.

GBP/USD Technical Analysis

  • There is resistance at 1.3938. Above, there is resistance at 1.4043
  • On the downside, 1.3730 has weakened in support. This is followed by support at 1.3627

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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