Sterling gains momentum ahead of GDP data

After a period of relatively subdued performance which had been triggered by a less hawkish set of comments by BoE Governor Mark Carney, cable seems to be coming back to life with key data continuing to impress. 

Retail sales for April climbed 1.3%, which was much better than the expected 0.4%. Ex-auto sales were actually up a whopping 1.8%. At the same time the BoE minutes showed a slightly more hawkish tone.

Later today we have the revised GDP reading along with business investment and public sector borrowing data due out. As a result, GBP/USD is mounting a challenge on the 1.69 level again after having traded as high as 1.692 overnight.

Meanwhile on the USD side of the equation, a headline saying the Fed saw no inflation risk in fuelling job growth could cap the USD in the near term. This has also given risk a bit of a kicker. The technical picture is also encouraging with an uptrend having been in place on the daily chart since November last year. At the same time the RSI is still quite neutral and far from overbought territory, which means there is still quite some room for movement. Should the pair manage to trade back above 1.69 then traders will be eyeing a move back to retest 1.70 in the near term.

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