GBP/USD eases on UK GDP revision ahead of key US data
Fawad Razaqzada September 29, 2017 7:45 AM
The pound came under pressure following this morning’s publication of key UK economic data, although the losses were limited as Mark Carney, the Bank of England Governor, reiterated that an interest rate rise was on the horizon. Data form the Eurozone wasn’t great either, although, unlike the pound, the euro still managed to rise. As the EUR/GBP rose, this helped to underpin the EUR/USD and undermine GBP/USD ahead of important US data in the afternoon.
According to the ONS, the UK economic growth was revised lower to 1.5% in the three months ending in June, from an earlier estimate of 1.7%. But the quarter-over-quarter figure was left unrevised at 0.3%. The annualised growth rate was thus at its slowest pace since 2013. This morning’s other UK macro pointers were mostly weaker, too. The Index of Services in three months to July, for example, only rose 0.5%, less than 0.7% expected. Meanwhile applications for mortgages unexpectedly fell to 66,580 in August from 68,452 in the previous month, Bank of England data showed. Speaking of BoE, Governor Mark Carney reiterated that a rate hike was forthcoming, possibly as early as November, but added that any increases would be to a “limited extent”.
As a result of the mostly weaker data and Carney’s “limited extent” warning, the pound weakened across the board. However, the losses were contained as the economic data was a bit out-dated, and Carney was being, well, himself.
Meanwhile in the Eurozone, headline Consumer Price Index was unchanged at 1.5% while core CPI eased to 1.1% year-over-year in September, both missing analysts’ forecasts. Meanwhile news that German unemployment rate fell to a new record low as unemployment fell by a sharper than expected 23,000, was overshadowed by separate data showing retail sales unexpectedly fell 0.4% month-over-month. In France, consumer spending fell 0.3%, missing expectations for a rise of 0.2%.
In the afternoon, we will have key data from both North American nations. From the US we will have among other things, Core PCE Price Index, which is a measure of inflation; personal spending and income, and Chicago PMI. From Canada, the key data is GDP, although this will be the month-over-month figure which makes it less important… unless it deviates from the +0.1% expectations by a big margin (unlikely but not impossible).
But the more important data the GBP/USD will be released next week as we will have the latest UK PMIs and also the US monthly jobs report, among other things. Ahead of that and this afternoon’s US data releases, the GBP/USD was trading around 1.3380 at the time of this writing. After failing to hold above the prior resistance between the 1.3445-1.3505 range, the sellers have attempted to push the cable down to the next support at 1.3325/30 area. So far, they haven’t quiet managed that, but may be able to do so if US macro data comes out surprisingly strong this afternoon. Any move back above the 1.3445-1.3505 range would re-establish the bullish trend again, unless we see another bullish price structure at lower support levels first. The lack of a significant move from the abovementioned resistance area (so far) has allowed the momentum indicator RSI to unwind from ‘overbought’ levels through time rather than price. This is good news for the bulls, I suppose.
Source: eSignal and FOREX.com.
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