GBP/USD continued to edge lower yesterday along with EUR/USD. Today sees the release of the third estimate of Q1 GDP. Since the release of the second estimate, construction and services output for March have provided little reason to expect revisions to today’s release, and therefore will unlikely trigger much market reaction. Q1 Current Account could see some interest, but Friday’s index of services will likely garner more interest as it gives insight into prospects for Q2. GBP/USD remains vulnerable to the downside on USD moves, but GBP/USD should see decent support around the 1.5290/1.5300 area.
EUR/USD continued to edge lower despite the weaker US number yesterday. Draghi’s comments in the morning didn’t really reveal anything new, as he reiterated his dovish stance still expecting a gradual recovery by year-end. While German employment numbers and Eurozone confidence indicators this morning will see some interest, sentiment towards the USD will likely remain the key driver for the currency pair. The next area of support for EUR/USD looks to be around the 1.2940/50 area.
The third estimate of Q1 GDP saw a relatively large downward revision to 1.8% q/q saar; personal consumption data was weaker than expected. While this triggered an initial USD negative reaction, this quickly faded. The average growth over the last two quarters is the lowest we have seen since 2009, which doesn’t really provide much of compelling case for tapering of QE. However, while the Q1 GDP data was disappointing it is backward looking, and the more forward looking releases remain a key focus. Consumer confidence surveys in Q2 have been strong – with the June number far exceeding market expectations. Today’s initial jobless claims will likely draw some market attention ahead of next week’s key non-farm payrolls release.