© Dukascopy Bank SA
On the contrary to the most traded EUR/USD currency pair, the Cable used to be far more volatile last week. This time, both British and American fundamentals disappointed markets in most of the cases. Such a situation resulted in very little changes in the value of GBP/USD, when comparing Monday opening and Friday closing levels; however, the pair attempted to trade broadly in favour of the British Pound, sending this currency above 1.55 at some points of time. Some turbulence of the Cable was registered already during the first day of the period on Monday, even though the day was extremely silent in terms of any major data both from the US and Britain. However, this development could be partly explained by expectations for the Fed meeting later in the week, when markets tried to price-in a possible outcome of the session and waited for comments from the regulator's Chair Janet Yellen. However, this news were overshadowed by GDP data from the UK, which rose just 0.3% in January-March, worse than a 0.5% growth expected. Despite all, these numbers have only had a short-term effect on the Sterling, which rebounded sharply in anticipation of the US GDP figures and FOMC meeting, which later pushed the US Dollar considerably weaker above 1.55 per Pound. While trading on the upside until Friday, bears managed to send the pair back towards 1.515, by commencing sell-offs of the pair amid falling UK Manufacturing PMI to just 51.9 points.
This week's sentiment on the Pound is completely opposite to the one seen a week before, with 67% of SWFX traders waiting for the Cable to drop this week. At the same time, the average expectation for May 8 stays broadly unchanged at last Friday's level of just above 1.515.
© Dukascopy Bank SA