Top Story

GBP/USD breaks bear trend after US CPI miss

The latest US inflation numbers were again slightly below expectations, causing the Dollar Index to further extend its losses, with the Canadian dollar leading the gains thanks to a much stronger jobs report from the North American nation. Headline CPI came in a touch softer at +0.3% m/m or 2.0% y/y, although core CPI met estimates at 2.1% y/y. In the dollar’s slipstream, European currencies were finding some support, with the likes of the GBP/USD and EUR/USD extending their gains following this morning’s mixed data from Europe.

Meanwhile, ongoing US-China trade uncertainty and the lack of any breakthrough so far today has seen the dollar trade mostly lower. The greenback was still higher against the yuan, but weaker against most major currencies.

UK economy grows 0.5% in Q1

Earlier, UK’s first quarter GDP came in bang in line with expectations at +0.5% q/q but on a month-over-month basis, GDP missed at -0.1% for March vs. 0.0% expected. Construction output fell surprisingly sharply by 1.9% but manufacturing production beat at 0.9% month-on-month, helping industrial production to print an above-forecast 0.7% reading. Clearly, manufacturers are stockpiling ahead of the UK’s eventual exit from the EU. There is no fresh Brexit news to report.

GBP/USD breaks bearish trend

As a result of the above fundamental considerations or otherwise, the GBP/USD has broken above its short-term bearish trend line today. Prior to today’s price action, the cable had sold off sharply earlier this week until it found support around its 61.8% Fibonacci retracement level yesterday. The week before, it had rallied noticeably to wipe out losses from around 5 weeks. So, the longer-term picture is turning slightly bullish.  In the short-term, if the cable can now build a base around its breakout level of 1.3025 then we may see the buying momentum gather pace later on today or in early next week. However, a daily close back below the 1.30 handle and all the bets would be off again.

Source: TradingView and

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.