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  • Pound post second weekly decline in-a-row against the Dollar.  
  • Next week: BoE and Fed meetings, PMIs and more.  

The GBP/USD consolidated a recovery on Friday but still ended the week lower. The main driver during all week has been the US Dollar. On Friday, the greenback was correcting lower and extended the retreat following US Q1 GDP data. However, it finished the week higher.  

The DXY lost 0.25% on Friday, but rose 0.50% over the week posting the highest weekly close since May 2017, above a key long term resistance. Better-than-expected data favored the greenback ahead of a critical week that includes the FOMC meeting and the jobs report. The GDP report on Friday came above expectations, but the details were not so positive and weighed on the USD.  

Cable peaked on Friday after the beginning of the US session at 1.2942 and then pulled back. It was about to end hovering around 1.2920/25, more than 50 pips above the 2-month low it reached yesterday at 1.2865.  

The weekly chart shows a negative signal: the first close below the 20-week moving average since January but at the same time, far from Thursday’s bottom. The main trend continues to point to the downside, but the recovery on top of 1.2900 could signal consolidation ahead.  

Week Ahead

Next week, the Federal Reserve and the Bank of England will have its policy meetings.  “With continued Brexit uncertainty and weak economic data out of both the UK and Europe, we do not think the Bank of England will change its policy at the upcoming meeting. It is one of the big meetings, so focus is on the inflation report and press conference. We do not expect a rate hike in the foreseeable future. In terms of economic data releases, we get April PMIs,” wrote Danske Bank analysts.  

According to economists at the National Bank of Bank consider that recent communications by FOMC members sounded cautiously optimistic. “While this suggests rate cuts may be out of the equation at this point, we don’t see the Fed returning to its hiking bias anytime soon, especially as it tries to convince markets that its 2% inflation target is a symmetric one. Economic news, especially on the inflation front, will need to surprise FOMC participants on the upside for a while for that to happen. We’re not there yet and, consequently, we see the Fed staying on the sidelines at this juncture“.  Also next week, the US official employment report will be released and the PMIs and ISM readings.  

Brexit continues to be an essential driver for the Pound and traders will also look at advances in the US-China trade talks.