Despite the absence of any events in the economic calendar, the British Pound was among the best performers on Friday. The currency appreciated more than 0.3% against the Euro and Australian Dollar, losing only relative to the US Dollar, which in turn strengthened 0.32% versus the Sterling.
British economic growth lost steam in the first quarter on the background of unexpected contraction in business investment. The second reading of Britain's first-quarter GDP figures confirmed the loss of momentum in the economic recovery. The Office of National Statistics announced that the economy grew 0.4% in the first quarter, slower than the 0.6% pace in the last three months of 2015, the same as the first estimate given in April. From a year earlier GDP expanded 2%, which was revised down from last month's first reading of 2.1%, the ONS said. Moreover, business investment missed with a fall of 0.5% against 3.2% expected. Also the BBA's mortgage approvals did not meet expectations by sliding to 40.1K against 44.8K predicted.
In addition, a separate report showed that out of the four main components on the output side of GDP, production and construction contracted from the previous quarter, while agriculture and services activity increased, according to a breakdown of the first quarter's reading. Production shrank 0.4% and construction fell by 1%, the ONS said. Manufacturing, the largest component within production, dropped 0.4%. Services, which account for a massive 79% of GDP, increased 0.6%, posting a 13th consecutive quarter of growth. The expansion was less than the fourth quarter's 0.8% pace.
No events for today, but 'brexit' remains an issue
GBP/USD to stay under 1.48
The overall risks for the Cable are heavily skewed to the downside, but the pair retains the potential to rally 150 pips during the next several days. GBP/USD has been recovering since late February, and now it is just a step away from a massive supply area between 1.4750 and 1.48 dollars, created by the 200-day moving average and 23-month falling resistance line. Still, the weekly technical indicators are mostly giving ‘buy' signals, and the up-trend standing at 1.45 remains intact, which implies a good possibility of a rebound from the weekly pivot point.
Daily chart
Hourly chart
Bullish and bearish forces equal in strength
The sentiment in the SWFX market is currently neutral, as the percentage of long positions increased from 43 to 46%. Meanwhile, the number of buy orders now exceeds the number of sell ones by 18 pp.
Positioning is similar with the other brokers. For one, there is virtually no difference between the amounts of long and short positions opened by OANDA traders. For another, Saxo Bank bears hold only a miniscule advantage over the bulls, namely 10 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.46 in three months