GBP/USD: 21-DMA limits immediate declines ahead of UK GDP, trade announcements

• Lesser than forecast UK consumer sentiment, hard Brexit fears are taking the toll on the GBP/USD pair.
• Quarterly GDP data and trade announcements will be the key for fresh direction.

Not only fears of no-deal Brexit but sluggish consumer confidence also weigh on the GBP/USD as it takes the rounds to 1.2670 ahead of the London open on Friday. Investors now await the final reading of the first quarter UK GDP and G20 headlines for fresh impulse whereas second-tier data from the US can offer intermediate trade opportunities.

Earlier during the day, The UK Times reported that British Prime Minister (PM) hopeful Boris Johnson is preparing an emergency budget for a no-deal scenario that includes aggressive tax cut and overhaul of stamp duties. The news added pessimism to already downbeat concerns about the Brexit as Mr. Johnson is a frontrunner for the PM post.

Not only Brexit fears, Boris Johnson’s latest promises to have a trade deal with the EU even after no-deal Brexit also got criticism from home and abroad alike. Further, monthly print of GfK Consumer Confidence for the UK slipped beneath -11 forecast to -13 and provided additional weakness to the British Pound (GBP).

Coming up in the investors’ radar will be final reading of first quarter (Q1) 2019 UK gross domestic product (GDP) and current account data followed by the US Personal Spending, Chicago Purchasing Managers’ Index (PMI) and Michigan Consumer Confidence.

While the UK GDP isn’t likely to deviate from initial forecasts of 0.5% and 1.8% on QoQ and YoY basis respectively, Current Account deficit might widen to £-32.000 billion from the prior of £-23.707 billion.

On the other hand, the US Personal Spending is expected to rise to 0.4% from 0.3% in May month whereas Chicago PMI is expected to weaken to 53.1 from 54.2 for June. Additionally, Michigan Consumer Confidence might also improve to 98.0 from 97.9 during June.

At the G20, the present PM Theresa May got less attention while indirectly threatening Russia as she will lose her position soon and also because major markets await the Saturday night’s trade negotiations between the US and China.

Technical Analysis

A sustained break of 21-day simple moving average (21-DMA) level of 1.2670 become necessary for the sellers to target 1.2660, 1.2610 and monthly bottom of 1.2506, until then 1.2700 round figure and current month high of 1.2785 may keep being on the investors’ radar