GBPUSD hovers around 1.2800, on opening of the European trading session on Wednesday, after the latest UK GDP reading met expectations. The trading pair went for 1.27930, at the time of writing, remaining virtually unchanged from Tuesday’s closing price. The dollar lacks macroeconomic backing from the US, as no high-impact data will be coming out today.
The UK economy grew by 0.2% in January, meeting the consensus forecast and improving from the previous month’s -0.1% contraction. This gives the cable some support, but is unlikely to inject volatility into the market. The BoE is expected to lower UK interest rates after the Fed, and the GDP reading aligns with that plan. Also, UK’s trade balance in January stood at –14.52 billion, beating the forecast figure of -14.90. UK’s Chancellor for Exchequer, Jeremy Hunt stated last week that the UK economy is expected to grow by 0.8% in 2024, up from the previous estimate of 0.7%.
The dollar currently hangs on the support provided by its February inflation figures, which showed that the economy is still relatively heated, and above the Fed’s targeted rate of 2%. Meanwhile, US treasuries have regained some strength, with yields on 10-year and 5-year bonds returning to 4.1% during press time. Looking at Wednesday’s macroeconomic data, we should expect the GBPUSD currency pair to trade within narrow margins as traders hold on for more impactful data on Thursday.
Technical analysis
GBPUSD currently faces resistance at 1.2810, which also serves as the pivot. The trading pair‘s upside will likely be limited as long as resistance remains at that level. The bearish momentum below the pivot mark could break the support at 1.2775, and set the stage for a push to 1.2760 in extended seller control. However, the momentum will favour the bulls as long as price action returns above 1.2810. That could see the trading pair attempt breaking the resistance at 1.2825. A successful breach will build momentum to target 1.2840.
