After rising to a fresh seven-month high at 1.2955, the GBP/USD pair went into a consolidation phase and stayed in a narrow range until the release of the US data. Despite the mixed data, the greenback gained momentum against its competitors and pushed the GBP/USD back towards the 1.29 handle. As of writing, the pair was trading at 1.2905, still up 0.02% on the day.
The data released by the U.S. Bureau of Economic Analysis revealed that the real GDP growth eased to 0.7% in the first quarter of 2017, missing the expectation of 1.2%. Despite the dismal GDP data, boosted by the PCE numbers, the US Dollar Index quickly erased its daily losses and is now making another attempt towards 99. At the moment, the DXY is down 0.12%, at 98.90.
Personal Consumption Expenditures, released by US Department of Commerce, for Q1 (QoQ) rose to 2.4% from 2% and beat the consensus of 2.3%, suggesting that the inflation has been accelerating. Furthermore, the Employment Cost Index (ECI) also rose by 0.8%, pointing to an increasing wage inflation.
The Chicago Purchasing Managers Index and the Michigan Consumer Sentiment Index numbers from the U.S. are coming up next in the session. The DXY movement could remain as the primary driver of the pair’s price action.
The initial hurdle for the pair aligns at 1.2955/60 (daily/Oct. 4 high) ahead of 1.30 (psychological level) and 1.3060 (Sept. 28 high). On the flip side, supports could be seen at 1.2900 (psychological level), 1.2840 (Apr. 27 low) and 1.2760 (Apr. 21 low).