Sterling Data has Little Impact on the Exchange Rate
The Office for National Statistics reported GPD to increase by half a percent in the first quarter. This was in line with expectations and unchanged from the preliminary reading.
It was the services sector which made the greatest contribution to GDP growth while production has contributed. Nominal GDP was reported to increase by 0.9% in the same time frame, revised lower from the initial estimate of 1%.
The UK account deficit was reported to widen by 6.3 billion pounds to 30 billion in the first quarter. Analysts had been looking for a deficit of 32 billion. Neither of the data releases had a significant impact on the exchange rate.
The Dollar Index has Traded in a Small Range for the Week Thus Far
It wasn’t just GBP/USD that saw a drop in volatility. The US Dollar index (DXY) also traded in a small range after briefly dropping to a three-month low on Tuesday. The index is attempting to recover, but sellers are capping rallies into the 96.35 area.
Equities are displaying similar price action with the S&P 500 hovering around record highs. Meanwhile, Treasuries have been range bound with the 10-year yield consolidating just above 2%.
To the downside, the hourly 200 MA has been holding the upside. However, the pair is struggling to rally from it. I see further support, just below it, at 1.2655.
A rally yesterday was capped by the 100 MA on the same chart. Currently, this MA is converging towards the psychological 1.2700 handle.
On a 4-hour chart, we see the same moving averages converging towards the current price. Once again, I think the G20 will clarify a near-term direction. I would not look to chase any moves in either direction today.
I think its also important to keep in mind that it is the last day of the week and month. Often, these days cause some excess volatility and unpredictable price swings.