Pound stung by GDP report

GBP/USD has lost ground after the UK growth report missed estimates, while the uncertainty over Greece hangs over EUR/USD. 

Pound coins and dollar note
Source: Bloomberg

Sterling hit by GDP report

The pound was pushed lower by the second estimate GDP which came in at 0.3% — the market was anticipating a reading of 0.4%. When you take into account that the UK is going through deflation, it does not bode well for the pound, and the pressure will remain on GBP/USD.

The US will announce the jobless claims and the pending home sales figures at 1.30pm and 3pm (London time) respectively. Lately the jobs data from the US has been strong, but that has been ignored by dealers and the market wants to see that people are going out and spending money. This is why the pending home sales report will carry more weight with traders.

The pound has been in a downward trend for the past two weeks with $1.53 acting as support. If that mark is punctured then traders will look to $1.50 for support. If $1.53 is held, any upward move will encounter resistance at $1.54, and then $1.56 will be brought into play.

Euro eyes Greek deal

EUR/USD is trading higher today although there is no sign of a deal being reached yet. As I previously stated, Athens must make a repayment on 5 June, but the European Central Bank hopes to reach a deal over austerity by Sunday. The Greek government will find it difficult to make good on the loan repayment without the next round of the bailout being unlocked. Greece has been involved in its fair share of crisis talk over the past few years, and a deal is usually reached at the last minute; this why the currency pair is edging higher.

Traders are still in the dark over as to when the Federal Reserve will increase rates, but September seems to be the meeting that traders are fixated on. The more medium-term view is that EUR/USD will stay in its longer term downward trend with $1.09 as the initial target, and if that is cleared $1.08 will be on the radar. The $1.10 mark is acting as resistance but if it is cleared traders will look to $1.12.

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