Sterling rises strongly today, boosted by upward revision in Q4 GDP as well as stronger than expected house price data. Meanwhile, Euro's recovery lost steam as the day goes, dragged down by Greece seven-year notes which fell on the first day of trading. Dollar remains soft, in particular against commodity currencies and more selling could be seen as fresh round of selling is found in USD/CAD in early US session. Crude oil and gold are steady around 82 and 1100 respectively which help stabilize the greenback. Data released from US saw S&P case shiller 20 city hour price dropped -0.7% yoy in January. Conference Board consumer confidence rose to 52.5 in March.
UK Q4 GDP was revised up to 0.4% qoq versus prior estimate of 0.3%. Also, nationwide house price sowed stronger than expected rise of 0.7% mom in March. As noted in our technical report, GBP/USD rise from 1.4798 is set to continue to have a test on 1.5381 resistance as consolidation from 1.4783 extends. GBP/JPY also broke 139.33 resistance to resume the corrective rise from 132.13 and is set to target 141 level. Further upside is expected in Sterling in near term.
Euro fails to hold on to gains against dollar and yen made earlier today. Greece's EUR 5b seven-year notes dropped on first day of trading. Yield premium widened about 0.34% to 3.68% over benchmark German debt. Euro is also somewhat pressured by selling in EUR/GBP too.
Other data released today saw Japanese unemployment rate was unchanged at 4.9% in February. Household spending dropped -0.5% yoy in February. Industrial production dropped -0.9% mom, rose 31.3% yoy in February. German import price index rose 1.0% mom, 2.6% yoy in February. Swiss UBS consumption indicator dropped to 1.2 in February. Canadian IPPI and RMPI rose 0.1% mom and 0.4% mom respectively in February.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.4913; (P) 1.4965; (R1) 1.5040; More
GBP/USD rises further to as high as 1.5058 so far today and intraday bias remains on the upside for further rally. As discussed before, rise from 1.4798 is treated as the third leg of consolidation from 1.4783 is could extend further to test 1.5381 resistance However, , upside should be limited by 38.2% retracement of 1.6456 to 1.4783 at 1.5422 to conclude the consolidation and bring down trend resumption. On the downside, below 1.4958 minor support will flip intraday bias back to the downside. Decisive break of 1.4783 low will confirm that whole decline from 1.6456 has resumed and should target 200% projection of 1.6875 to 1.5829 from 1.6456 at 1.4364.
In the bigger picture, there is no change in our bearish view. That is, medium term rebound
from 1.3503, which is treated as a correction to down trend from 2.1161, has completed at 1.7043 already. Fall from there is tentatively treated as resumption of the down trend from 2.1161 and should target a new low below 1.3503. On the upside, break of 1.5814 resistance is needed to invalidate this view. Otherwise, outlook will remain bearish.