The British pound has posted slight gains at the start of the week. In the North American session, GDP/USD is trading at 1.3894, up 0.14% on the day.
The pound punched above the symbolic 1.40 level last week and appeared poised to make further gains against a struggling US dollar. However, the pound has settled down and is trading close to the 1.39 level.
On Tuesday, the UK releases CBI Realized Sales for April (10:00 GMT). This indicator measures sales volume, an important indicator of consumer spending. Realized Sales has posted only one gain in the past eight readings. The previous two readings have been at -45, which points to a sharp drop in sales volume. The forecast for April stands at +9, and a reading above zero would be a huge improvement.
The market will be keeping a keen eye on the FOMC meeting on Wednesday (18:00 GMT). The Federal Reserve has insisted that it will not stray from its dovish stance, but as the economy heats up and inflation moves higher, the market will be looking closely for any clues about tapering QE.
The Fed may not provide those sought-after hints, but is likely to provide a statement that will reflect a more optimistic tone about economic conditions, as the economy is showing clear signs that the recovery is gaining steam. A positive message from the Fed could give some support to the ailing US dollar. Still, Fed Chair Powell is unlikely to make any announcements about tapering QE. Powell has said he would telegraph tapering to the market, but his recent comment that the economy is at an “inflection point” appears to indicate that a taper is not imminent.
GBP/USD Technical Analysis
- There is resistance at 1.3993, followed by resistance at 1.4100
- There is support at 1.3794. Below, there is support at 1.3702
