British growth for the second quarter was unexpectedly  revised to 1.2%. These good news lifted GBP/USD lifted the Pound only for a short period of time. Worries about the future and the upcoming second release of GDP for the US loom. Update on cable.
British GDP already posted a big surprise in the first release – 1.1% instead of 0.6% that was predicted. It then boosted the Pound and sent the bulls raging. Also now, the upwards revision surprised economists that merely expected a confirmation of the first release. But this time, the reaction was very mild:
GBP/USD made a jump above the 1.5520 resistance line and reached 1.5443, but this last less than a minute – the pair fell quickly down under 1.55, but a safe distance from the 1.5470 line that it managed to regain yesterday.
At the beginning of the week, GBP/USD managed to cling to the 1.5470 support line, but later it fell below the line and stopped only at 1.5370, 20 pips above the critical 1.5350 line. A recovery yesterday sent it back to the narrow 1.5470 – 1.5520 range.
Q2 was great, but the future is dark
The Euro zone also saw great growth in Q2, with Germany leading the pack – an amazing 2.2% growth rate, the best since the reunification of the country. Still, the Euro failed to rise, on fears that the near future will be bad. Many worrying signs of a double-dip recession in the US were released in the past weeks, triggering risk aversive trading.
So, similar to the Euro, these good figures in the UK fail to lift the Pound. In addition to worries about the future, Q2 was probably much worse in the US – later we’ll get the second release for US GDP in Q2. The initial report about a weak 2.4% growth rate (annualized) will probably be significantly downgraded to only 1.5% or even worse.
So, with a risk aversive mood in the markets, more bad news from the US can send GBP/USD further down. Below 1.5350, the next support lines are 1.5230 and 1.5130. A recovery of the Pound will send it towards 1.5720 and 1.5833.
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