Amongst the jargon of the Q1 GDP figures there were lower revisions for imports and exports the market was looking for +0.2% in imports and 0.0% in exports. We got -1.1% for imports and -1.0% for exports. netted off it’s not much but the falls could highlight a slowdown.
As for the deficit numbers, they don’t look good at all. There may be some effects from revisions and the switch over the financial year but the numbers will be giving fodder to the opposition party in parliament. Should make PM’s question time interesting at least.
Despite the confirmation of growth which leaves us just 0.6% below pre-crisis levels, the pound didn’t like what it saw and has acted accordingly. This week was a potentially big one for sterling but we’ve not had anything that warrants another go at 1.70.
If we lack any meaningful news to take us higher then we are going to see some consolidation and, as we have seen many times previously after UK data, gravity likes to take over and we slowly slide down over a few sessions. I’ll be keeping an eye on what the dollar does but I’m going to be looking to sell near 1.69 if we see a move back towards it.
GBP/USD daily chart 22 05 2014
1.6920 is the level that’s halting the upside and support is seen at 1.6850/55 with stronger at 1.6830/40. There’s been good interest at 1.6800 so I wouldn’t be surprised to see us ranging 1.68/1.69 in the short term.
EUR/GBP has bounced nicely from 0.8086 and support dating back to Jan 2013. Should that go we could be seeing the Dec 2012 support level at 0.8035.
EUR/GBP daily chart 22 05 2014
There’s still some heavy tech resistance in and around 0.8140/60 which may entice euro sellers. It’s looking doubtful we’ll get up there anytime soon but I like the look of a short against the meeting of the 55 & 100 dma at 0.8250/55