Sterling declines ahead of tomorrow’s GDP numbers
The sterling continued the declines experienced this week ahead of key economic data expected tomorrow. The country’s second preliminary reading of the GDP is expected to show an annual growth of 1.8%, which will be higher than the previously-released 1.4%. On a QoQ basis, the economy is expected to have grown by 0.5%. The trade deficit is expected to decline to 13.8 billion pounds from the previous 14.11 pounds. The manufacturing production in March is expected to have increased by 0.1% while the industrial production is expected to have increased by 0.5%. Today, data from the country showed that retail sales increased by 3.7% in April while the RICS house price balance declined by more than 23%.
The Australian dollar continued the declines today as investors continued to watch out for any further trade issues. This is because the US is expected to add tariffs to Chinese goods worth more than $200 billion tomorrow. In an analysis, Citi said that these tariffs could lower the Chinese GDP by about 1%. Today, the country released mixed economic data. The PPI increased by 0.9% in April while the CPI increased by 2.5%. The outstanding loan growth rose by 13.5% in March.
In the United States, data from the Commerce Department showed that the trade deficit narrowed to $50 billion in April. This happened because of the increased exports and slightly lower imports. The core PPI rose by a YoY rate of 2.4%, which was lower than the expected 2.5%. On a MoM basis, the core PPI increased by 0.1%. The initial jobless claims rose by 228K, which was worse than the expected 215K while the continuing jobless claims increased by 1,684K. Meanwhile, in Canada, exports increased to C$49 billion, which was better than the expected $48 billion while imports increased to $52 billion.
The AUD/USD pair continued the declines started on Tuesday this week. The pair reached a low of 0.6965, which was close to the important support of 0.6960. On the hourly chart, the pair’s price is currently below the 25-day and 50-day moving averages. The pair’s current price is at the lowest level it has been since December last year. As trade jitters continue, the Australian dollar could continue moving lower.
The GBP/USD pair declined to an intraday low of 1.2975. This was the lowest level since Friday last week. On the hourly chart, this price is along the 38.2% Fibonacci Retracement level. It is also below the 25-day and 50-day moving averages. The RSI has remained closer to the oversold level while volumes are declining. The pair will likely continue falling ahead of key UK data expected tomorrow.
The EUR/USD pair was little moved today. It is now trading at 1.1185, which is also the 50% Fibonacci Retracement level and slightly below the 50% and 25% day moving averages. It is also forming a symmetrical triangular pattern. There is a likelihood that this consolidation will continue as investors wait for the US CPI data expected tomorrow.