GBPUSD UP On Weak Dollar Fundamentals, Strong UK Housing Data

Summary:
• GBPUSD trades marginally high, propelled by housing data as the dollar is undone by a unfavourable US fundamentals. What could change?

GBPUSD is marginally up early on the European session on Friday, gaining +0.12% and trading at 1.2640 at 08.20 GMT. The pound is clawing back after unfavourable US macroeconomic indicators curtailed the dollar. Furthermore, the UK Housing Price Indexes (HPI) have risen in the latest issue, providing tailwinds for GBP. There’s much to look forward to in terms of high-impact releases from both economies on Friday, and these could alter the cable’s trajectory.

Thursday was a tough day for the US dollar, as jobless claims data and PMI data both fell below forecast projections. The number of people registering for first-time jobless insurance rose to 215k, beating the forecast 209k. Also, the February figure for Chicago PMI fell from January’s 46.0 to 44.0, and was lower than the projected 48.0.  Meanwhile, Core Personal Consumption Expenditure (PCE) Price Index met projection figures, both month-on-month and year-on-year.

The pound got a boost from positive Nationwide HPI readings released early Friday morning. The index measures the average change of house prices across the UK and it rose by 0.5% for both month-on-month and year-on-year February readings.

Looking ahead, GBPUSD will get fresh impetus from UK and US Manufacturing PMI data. Also, Commodity Futures Trading Commission’s (CFTC) will release a number of weekly Commitments of Traders (COT) reports. These could help shape market sentiment around the GBPUSD trading pair. Furthermore, three FOMC members and one BoE monetary policy committee member could provide useful hints on interest rates.

Technical analysis

The GBPUSD trading pair has a pivot at 1.2640, and the RSI leans towards the sellers. A strong selling momentum below the pivot will target bringing the exchange rate to 1.2610. Extended bearish control could breach the support and aim further lower at 1.2590. The buyers will need to take control and push above the pivot to build upside momentum. That could see GBPUSD breach the 1.2655, which would enable the bulls to test 1.2675.