The US economy expanded at a stronger-than-initially-expected pace in the March quarter; however, an economic slowdown remained on the table in the second quarter. The Commerce Department reported on Friday that Q1 GDP growth came in at a seasonally adjusted annualised pace of 1.2%, compared to an originally reported pace of 0.7%. Meanwhile, analysts expected the economy to expand 0.9% in the reported quarter.
However, that was the worst performance over the past 12 months. Back in the Q4 of 2016, the economy grew 2.1%. Analysts suggested that the Q1 slowdown was mainly driven by the US President Donald Trump's inability to boost economic growth as promised. Even though the Q1 figure was revised up sharply, weak retail sales, business investment, falls in investment inventories and an increase of the goods trade deficit destroyed hopes for a rebound in the Q2. A separate report released by the Commerce Department showed that new orders for US-manufactured durable goods dropped 0.7% last month, whereas orders for core durable goods fell 0.4%.
Upcoming events: US Core PCE Price Index, Personal Income and Spending
GBP/USD retests wedge's support
The GBP/USD pair behaved in accordance with expectations yesterday, having recovered only half way towards the weekly pivot point. A failure to post solid gains is likely to result in more weakness today, with the monthly PP at 1.2762 being the main target. The Cable has another relatively strong support area around the 1.27 mark, but only another disappointing political event is to have sufficient strength for a leg that far down. On the other hand, the wedge's lower boundary could still have the strength to trigger a rebound, but technical indicators are unable to confirm this possibility, as they turned from bullish to mixed.
Daily chart
Hourly chart
Bearish sentiment still prevails
There are 52% of traders being long the Sterling today (previously 51%), while the share of purchase orders slid from 53 to 51%.
A less optimistic situation is observed elsewhere. The sentiment at OANDA remains bearish, namely 60% of all open positions are short and the remaining 40% are long. Meanwhile, sentiment at Saxo Bank is also bearish, with 61% of traders now being short and the other 39% - long on the Sterling against the US Dollar.
Spreads (avg, pip) / Trading volume / Volatility
Traders see Pound recovering
Traders believe the Cable is to rise above the 1.30 major level by the end of the next three months, as 60% of survey participants share this belief. While the current price is around 1.30, the average forecast for August 30 is 1.3056. The 1.34-1.36 range is now the most popular price interval, having 24% of the votes, while on the second place are the 1.20-1.22 interval, with only 14% of the voters choosing it.