Global macro overview for 29/.05/2017:
The British economy expanded at a weaker pace than expected. The Office for National Statistics reported that the second estimate of Gross Domestic Product (GDP) was at the level of 0.2% in the first quarter, while market participants expected 0.3% increase, just as the preliminary expectations were. This was the slowest pace of growth since the beginning of 2016 and the biggest contributors to the weak GDP were in the services sector: the retail and accommodation reported the largest drops amid the post-Brexit vote sharp fall in the value of the British Pound. Moreover, the biggest drop was noted in household consumption, that account for about 70% of Britain's GDP growth. The household consumption increased by mere 0.3%, the weakest number since 2014.
There are three versions of GDP released a month apart: Preliminary, Second Estimate, and Final. The Final UK GDP for the first quarter will be released next month and if the numbers will still be lower than expected, then the British Pound might depreciate further, giving more reasons for EUR/GBP pair to rally higher.
Let's now take a look at the GBP/USD technical picture on the H4 time frame. The price had tested the technical support at the level of 1.2772 and bounced back but is still trading below the techcnail resistance at the level of 1.2844. The market conditions still look oversold, so sideways moves are expected.
