The British pound is in negative territory on Thursday. In the North American session, GBP/USD is trading at 1.3760, down 0.29% on the day.
There are no British events on today’s schedule, and predictably, the pound is having a quiet day. The week will end on a busy note, with a data dump out of the UK early on Friday. GDP for May is expected to slow to 1.7% MoM, down from 2.3% in April. The forecast for Manufacturing Production for May is more positive, with a consensus of 1.0%, compared to -0.3% beforehand.
The UK recovery continues to gain traction, and the June PMIs were another indication that the economy is headed in the right direction. The PMIs were all above the 60-level, pointing to strong growth in the manufacturing, services and construction sectors.
The government is keen to completely open up the economy and remove all health restrictions on July 19. The original ‘Freedom Day’, set for June 21, had to be postponed. Prime Minister Boris Johnson says that the move will go ahead, despite a jump in Covid cases, which have jumped to 30,000, the highest level since January. Health officials have warned that scrapping all restrictions could lead to spike in infections, so the government is clearly taking a big risk in moving ahead.
Fed in no rush to taper
There was an air of anticipation ahead of the release of the FOMC minutes on Wednesday, with investors hoping that the minutes would provide some clues as to when the Fed might begin scaling back its bond purchases. In the end, however, the release turned out to be a sleeper, and market reaction was muted. The Fed failed to give any clues as to a timeline for a taper, and most members did not support a tightening of policy. Still, the fact that the Fed is “talking about talking about a taper” can be viewed as a small step towards a tighter policy down the road.
GBP/USD Technical Analysis
- There is resistance at 1.3938. Above, there is resistance at 1.4043
- On the downside, 1.3730 has weakened in support. This is followed by support at 1.3627