- GBP strengthens slightly against USD
- Technical bias remains bearish
- US GDP growth below expectations
The GBP (British Pound) traded slightly higher against the USD (American Dollar) yesterday after some important economic reports were released. This pushed the GBP/USD rate over the 1.3200 level.
From a technical perspective, however, the bias is still bearish because the highest point in the recent upside move was lower than the previous one.
At the time of this writing, the currency pair was trading at 1.3216. Looking at the charts, a support level can be identified at 1.3100, and this will act as a psychological barrier before reaching 1.3055 – the horizontal support level.
Below that, the next important horizontal support level is at 1.2953.
On the upside, there is a clear resistance level at 1.3643, where there should be strong resistance before the GBP/USD rate can reach 1.4000 – a crucial psychological level. After that, 1.4342 is the next major number because it constitutes the meeting of a trendline resistance and a horizontal support level.
Until the GBP/USD rate can break through 1.4000, however, the technical bias will not change from bearish to bullish.
In the first quarter of 2018, the American economy fared worse than earlier thought, with consumer spending reaching a near 5-year low. Since then, growth seems to have recovered slightly, mainly because of tax cuts and a vibrant labor market.
The Commerce Department announced yesterday that the GDP increased by 2% on an annual basis during the first quarter instead of the 2.2% mentioned in its second estimate of Q1 GDP.
The US economy grew by 2.9% during the fourth quarter of last year. The downturn in Q1 2018 was a reflection of inventory building and consumer spending being lower than the previous estimates.