Cable Struggling for Bullish Continuation

By Investor Empires On Apr 27, 2023

GBP/USD News and analysis

Recommended by Richard Snow

Get your free GBP forecast

The first quarter US GDP disappointment does little for cable

US GDP for the first quarter missed the 2% growth estimate, coming in at a disappointing 1.1%. Edition was the first appreciation that usually has the greatest market-moving potential, and had very little impact post-release. In fact, the British pound traded lower in the early afternoon during the London session despite support from Goldman Sachs which now expects the UK interest rate to peak at 5%. Markets posted around 4.75% for the peak, so the potential for a re-quote remains bullish, especially as the US price outlook took a hit after yesterday’s banking concerns about another sharp drop in the share price of startup First Republic Bank.

GBP/USD technical considerations and interest levels

The GBP technical outlook indicates a lack of bullish momentum to reach a fresh yearly high despite falling US yields and a miserable US dollar. Yesterday and so far today, the extended upper wicks reveal a rejection of higher prices or at least a reluctance to trade higher than current levels, in the absence of a catalyst. Keep in mind that the potential for a catalyst is improving with the busy economic calendar next week.

Immediate support is seen at the support area around 1.2445 followed by the bottom side of the wedge formation, 1.2345 and the area around the psychological round number at 1.2300. Resistance remains at the swing high of 1.2547.

Daily chart of the British pound / US dollar

Source: TradingView, prepared by Richard Snow

Recommended by Richard Snow

Trading Forex News: The Strategy

Major risk events for the next seven days

After today’s US GDP data, tomorrow we will get the final bit of inflation data ahead of the all important FOMC meeting as markets played down the possibility of a 25bp hike from Jerome Powell and the committee given the recent rise in uncertainty and a slight lift in volatility. Hotter PCE data, however, may put those odds back where they were a week ago.

In addition, the Manufacturing and Services PMI (ISM) is due out next week as manufacturing lags behind the best-performing services sector – the major contributor to US GDP.