GBP/USD challenges 1.3800 on downbeat UK GDP

• Cable extends the move lower to the 1.3800 area.
• UK GDP missed expectations in Q1, expanding 0.1% QoQ.
• The pair drops and tests fresh 7-week lows ahead of Carney.

Another hit to the Sterling is now forcing GBP/USD to trade in fresh multi-week lows in the 1.3825/20 band.

GBP/USD weaker ahead of Carney

Cable is prolonging the leg lower today, fully retracing the April rally and hovering over the area of 1.3820, levels last traded in early February. Spot is already shedding more than five big figures since post-Brexit tops near 1.4380 recorded on April 17.

GBP tumbled further after the advanced reading of UK’s GDP showed the economy is expected to expand at an annualized 1.2% during the January-March period and 0.1% inter-quarter. Further data saw Index of Services also missing consensus, up 0.4% vs. a 0.6% gain forecasted.

In the meantime, the pair has traded in red figures in 8 out of the last 9 sessions in response to the ‘not-hawkish’ tone from the Bank of England at its last meeting, poor results from the UK docket as of late and increasing bullish pressure in the buck.

Later in the session, Governor M.Carney is due to speak. In the US docket, the centre of attention will be on the first reading of the Q1 GDP and final figures for April’s U-Mich index.

GBP/USD levels to consider

As of writing, the pair is losing 0.70% at 1.3821 and a break below 1.3802 (low Apr.27) would aim for 1.3712 (low Mar.1) and then 1.3457 (2018 low Jan.11). On the upside, the next hurdle emerges at 1.4010 (55-day sma) seconded by 1.4084 (21-day sma) and finally 1.4247 (high Mar.26).