GBP/USD marked a lower high and is now retreating. While the pair is still trading above 1.70, it seems unlikely that it will challenge the fresh multi-year high of 1.7063.
Yet again, BOE governor Mark Carney is partially responsible for the move, but also the data is not upbeat enough for cable to ride on the weakness of the US dollar.
Here is the chart showing that the pair peaked at a lower high this time:
Governor Carney said that interest rates may rise “this year or the next”. After his recent comments, markets have already moved expectations for a rate hike late this year. He now cast doubt on this.
In addition, UK year over year GDP was revised down from 3.1% to 3%. This is a minor change, especially as quarter over quarter, the strong growth rate of 0.8% remained unchanged also in the third and last release.
Yet this was joined by a worse than expected current account deficit: 18.5 billion instead of 17.1 billion expected for Q1 2014. At least this is lower than 23.5 billion in Q4 2013.
The only good news in the influx of data is that business investment in Q1 was revised up to a gain of 5% instead of 2.7% originally reported.
1.70 remains clear support and 1.7063 is resistance. For more, see the GBP to USD forecast.
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