UK GDP preview: what to expect of GBP/USD?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 25, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    The GBP/USD pair is trading around 1.3924 (76.4% Fibo expansion of July 2014 high-April 2015 low-June 2015 high) in Europe after falling sharply in the previous three sessions on Brexit fears. The immediate focus now is on the UK GDP data.

    Pound could overlook GDP data

    A revision to fourth-quarter UK GDP figures is due for release today. The growth rate is likely to be left unrevised at 0.5%. If the actual figure matches the estimate, the British Pound may overlook the data, especially since Brexit fears continue to dominate the market sentiment.

    A downward revision of the GDP could only add to the bearish tone around GBP, while an upward revision, though positive in theory, may not be enough to push Sterling higher. Moreover, the BOE has no intention of going higher at this point.

    Plus, looming Brexit vote makes it difficult for the bank to talk about rate hikes. Hence, it would take a surprisingly strong GDP figure to push Sterling higher.

    GBP/USD Technical Levels

    The immediate support is seen at 1.3878, under which the cross may find support at the psychological level of 1.38. On charts, a major support is seen directly at 1.3654 (March 2009 low). On the other hand, a break above the immediate resistance is seen at 1.3963 (hourly chart resistance), which if taken out shall open doors for 1.40 levels. If breached, the spot could rise to 1.4057 (previous cyclical low).
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