We could see strong sterling rally on dollar weakness, boosting it to March highs, but all this happenned during sessions lacking relevant data for the traders. Today we expect the gross domestic product for the first quarter to be released with some dissappointment expected.
The UK Office for National Statistics is about to publish its quarterly report at 8:30am GMT on Tuesday. Negative release could halt the rally and get back the currency pair to the downward trajectory.
We expect GDP to come out slower as retail sales and trade came out worse during these three months, with relevant impact on the economy growth for the Q1 2015. After this report the focus will turn to election struggle.
As for the US dollar, seasonal weakness does not pose any stop to long-term strengthening based on rate-hike speculation. Albeit some Fed Presidents do not feel that US economy needs liftoff as soon as in June, general belief still holds rate-hike in the frame of the year 2015. On Wednesday we will see the Federal Open Market Committee releasing a statement with traders focusing on any hints of the liftoff or change in the economy, which could hint benchmark rate increase.
From the fundamental point of view, we remain bearish on the GBP/USD, due to rate-hike challenge favouring first liftoff in the US rather than in the UK.
From the technical point of view, bears should put their TP at $1.5114, or if the support is breached, even at $1.5029. In the case of positive surprise of GDP numbers, we can expect the sterling to rise even further. As there is a huge space between next resistance at $1.5391, we may expect the rally to be halted around the level of $1.5300.
For any questions of recommendation, feel free to write us on hello@goforex.eu
You can meet us at Forex Expo in Bratislava, in May 20-21, 2015
