Slowing U.K. GDP To Undermine GBP/USD Rebound

DailyFX Table

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

GBP/USD

1.3032

1.3058

1.2984

GBP/USD appears to be making a run at the monthly high (1.3126) as it initiates a series of higher highs & lows, but the 2Q U.K. Gross Domestic Product (GDP) report may undermine the rebound in Cable as the growth rate is expected to slow to an annualized 1.7% from 2.0% during the first three-months of 2017.

Another below-forecast GDP print may encourage the Bank of England (BoE) to preserve the record-low interest rate throughout 2017 as it dampens the risk for above-target inflation, and the majority of central bank officials may continue vote in favor of the wait-and-see approach as the U.K.’s departure from the European Union (EU) clouds the economic outlook with high uncertainty. As a result, GBP/USD may consolidate over the near-term as the technical outlook remains cluttered with mixed signals.

GBP/USD Daily

GBP/USD Daily Chart

Chart – Created Using Trading View

After failing to close below the 1.2950 (23.6% retracement) hurdle, GBP/USD stands at risk of facing range-bound conditions as it remains capped by the Fibonacci overlap around 1.3090 (38.2% retracement) to 1.3120 (78.6% retracement); keep in mind the Relative Strength Index (RSI) continues to deviate with price as it preserves the bearish formation from May.

In turn, lack of momentum to test the monthly-high (1.3126) may open up the next downside region of interest around 1.2860 (61.8% retracement) followed by the overlap around 1.2630 (38.2% expansion) to 1.2680 (50% retracement), which sits just below the 100-Day SMA (1.2741).

Ticker

Last

High

Low

Daily Change (pip)

Daily Range (pip)

EUR/USD

1.1644

1.1684

1.1630