LOWER FORECAST ON THE BRITISH GDP GROWTH HIT THE POUND
The EUR/USD rolled back after it renewed the 2.5-year maximums and currently is consolidating in anticipation of tomorrow’s release of labor market data in the US. Better figures on non-farm payrolls and the unemployment rate tomorrow may become a trigger for a massive selloff due to profit taking. Today support for the common currency came from retail sales in the Eurozone that in June expanded by 0.5% against the expected zero change. Traders ignored the flash manufacturing PMI in the euro area that remained at 55.4 for June.
The GBP came under pressure today following the Bank of England’s decision to keep the interest rate unchanged at 0.25%. Leading up to the event, investors were going long on the pound as they anticipated a similar vote of confidence for a rate hike of 5-3 vote. However, Bank of England members voted 6-2 to keep the rate at its current level. Disappointed investors received more dovish news from the BOE as it reduced its forecasted growth for the UK for this year by 0.2% to 1.7%. The central bank noted that Brexit is weighing in on the economy as consumers are feeling the pinch of a lower pound.
The AUD/USD is consolidating after a sharp fall caused by the weak Australian trade balance data according to which the surplus in June was only 0.86 billion compared to the expected 1.78 billion. The pair is getting support from positive growth in the commodities markets, but we do not rule out a correction in the near future. The focus for traders tomorrow will be the retail sales report in Australia and the RBA’s monetary policy statement which will be released at 01:30 GMT.
The euro price renewed positive dynamics after some consolidation during the day. Quotes previously tested the resistance at 1.1900 and in case of its overcoming the next objective will be the psychologically important level of 1.2000. On the other side, fixing below the lower limit of the current rising channel and the support at 1.1800 may lead to the trend change to negative with targets at 1.1700 and 1.1620.
The GBP/USD price has shown a rapid descending movement as a result of which the quotes broke through the lower limit of the ascending channel and the important level of 1.3250. This fact may be the basis for a continued decline with potential targets at 1.3050 and 1.2950. The RSI on the 15-minute chart approached the oversold zone, indicating a possible rebound. The growth potential is likely to be limited by resistance at 1.3250.
The aussie quotations are trying to restore some positions after they left the limits of the local rising channel. Fixing beyond its borders will be the basis for continued decline to 0.7875 after which the negative dynamics may continue to 0.7800 and 0.7740. There is strong resistance at 0.8000 and its overcoming is less likely today. Volatility is likely to rise tomorrow due to a number of important events in Australia and the US.