Technical Bias: Bullish
- GBPUSD trading at 8-week highs near 1.5300.
- UK economy grows just 0.3% in Q1, weakest rate of growth in three years.
- FOMC kicks off April rate meetings in Washington.
The GBPUSD climbed to a fresh eight-week high on Tuesday, extending its bullish break out despite weaker than forecast UK GDP.
The GBPUSD advanced 0.5 percent to 1.5304 in the European session, an eight-week high. The pair would subsequently consolidate just below the 1.5300 region, advancing more than 0.4 percent. The GBPUSD is testing the 1.5299 resistance. A clean break north of that level would expose 1.5360 as the next target. On the downside, initial support is likely found at 1.5142.
The pound’s breakout began in mid-April. The GBPUSD has gained more than 4.4 percent since April 13.
UK First Quarter GDP Misses Target
UK economic growth slowed more than forecast in the first quarter, raising concerns about the economic outlook ahead of the May 7 general election.
UK gross domestic product (GDP) advanced jut 0.3 percent in the first three months of 2015, the weakest pace in three years, the Office for National Statistics reported on Tuesday. Economists forecast a quarterly gain of 0.5 percent.
In annualized terms, UK GDP advanced just 2.4 percent, well below the fourth quarter rate of 3 percent and expectations for 2.6 percent.
Growth was contained by weak industrial, service and construction output. The ONS reminded readers that the preliminary estimate was based on less than half of the data required for the final estimate.
Federal Reserve Kicks off April Interest Rate Meetings
The Federal Open Market Committee (FOMC) kicked off its two-day policy meetings in Washington on Tuesday. The Fed is widely expected to hold its target for the federal funds rate at 0.25 percent. Weak first quarter GDP could give policymakers enough scope to maintain an accommodative stance toward policy for a while longer.
On Wednesday the Commerce Department is expected to show annualized GDP growth of just 1 percent in the first quarter.