UK GDP preview: What to expect of GBP/USD?

The second estimate of the United Kingdom GDP is expected to have inched up to 0.6% in the second quarter, from the first, when it rose 0.4%. The report is expected to show that business investment struggled leading up to the Brexit vote.

Should the data come in line or better-than with expectations, we could see a momentarily upward spike in the cable to 1.33 handle. While a weaker GDP report could trigger a fresh selling-wave in GBP/USD, sending the rate back towards 1.3150 – key psychological levels. On either side, the reaction to the data is likely to be limited as the main market moving event for today remains Fed Chair Yellen’s speech.

Analysts at TDS noted, “Markets are positioned for no revision, but depending on how the ONS treats the newer imports data alongside other components, we could see something as weak as 0.3% q/q. Deputy Governor Minouche Shafik is speaking at Jackson Hole, but is on a panel about the financial market landscape, so is unlikely to discuss monetary policy.”

GBP/USD: Technical Levels

Haresh Menghani, Analyst at FXStreet notes, “The pair stalled its three consecutive days of winning streak at an important confluence resistance near 1.3250-60 region, comprising of a descending trend-line resistance and 50-day SMA. Hence, bulls are likely to make a fresh attempt to break through this key resistance, above which a fresh leg of up-move should boost the pair immediately beyond 1.3300 handle, towards monthly high resistance near 1.3370 area. The up-move could further get extended in the near-term and could lift the pair back towards July monthly high resistance near 1.3475-80 region before eventually attempting to reclaim the very important 1.3500 psychological mark.”

“Alternatively, failure to conquer this immediate resistance, and a subsequent drop below 1.3150 immediate support, would confirm a reversal and could turn the pair vulnerable to break below 1.3100 handle and head towards testing a previously strong resistance, now turned important support, near 1.3050-40 zone.”