UK avoids triple-dip recession, sterling up on positive GDP data
April 25, 2013 10:29 am GMT+0 in Forex Analysis
Fundamental analysis (25 April 2013) – The sterling received a much needed boost and quickly jumped against its major currency counterparts, including the dollar, as the UK GDP data revealed surprisingly positive results on Thursday, helping the country to avoid a looming triple-dip recession.
The Office for National Statistics’ preliminary data showed that the UK’s GDP grew with a better-than-expected pace for the first quarter of 2013, registering a 0.3% rise, while the year-on-year figure showed a 0.6% increase. These figures gave a significant relief for the otherwise troubled UK economy.
Following the news, the sterling shot to $1.5408 at the time of writing, after previously trading in the range of %1.5270 – $1.5330. Analysts expect the positive trend to continue for the rest of the trading day.
Meanwhile, the euro climbed against the dollar in Asian trading on Thursday, as worst-than-expected US Durable Goods data released yesterday weighed on the greenback. The single currency managed to recover slightly after its earlier drop below the 1.30 mark on poor economic figures fromGermany. This is the latest from a series of weak performances of Eurozone countries, which sparked speculations about the ECB cutting its interest rate soon.
The IFO index, which reflects on the German business sentiment, showed a second consecutive drop in April. This added even more fuel to the already worsened economic conditions as the previous day (Tuesday) revealed that the German PMI has dropped below the key 50.0 mark to 47.9.
Despite recent comments by ECB policymakers for an interest cut in case the economic activity continues downhill, some market makers consider such a step unlikely to happen during the ECB’s next meeting, since the current interest rate is already at a record-low of 0.75%.
Technical analysis EUR/USD
At yesterday‘s session the euro was in the 1.2965-1.3030 range while this morning the currency pair is trading at 1.3025-1.3050.
Should the euro overcome the resistance zone at 1.3045-1.3070, its aim will be reaching and testing the zone at 1.3100-1.3110. If successful, the upward trend will continue to 1.3130-1.3150. If it falls below the support at 1.3035-1.3015, the next one is expected to be at 1.3000-1.2975. In case of a breakdown, the downward trend will continue to 1.2955-1.2935.
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