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GBP/USD Bullish Ahead of UK GDP Data

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GBP/USD Bullish Ahead of UK GDP Data

The British pound strengthened Monday, as the forex markets bid up the GBPUSD ahead of key economic data.

The GBPUSD pair soared nearly 0.7 percent to 1.6574, as a dearth of economic data in the UK shifted the market’s attention to Tuesday’s GDP report. The UK economy expanded 0.7 percent in the fourth quarter and at an annualized rate of 2.8 percent, according to a median estimate of economists polled by Thomson Reuters. UK recovery accelerated in the third quarter of last year, with GDP rising at a 0.8 percent clip.

The pair’s trend index is on the bearish side as it approaches the technical resistance of 1.6586. If UK GDP data aligns with forecasts, the GBPUSD pair will likely break the 1.6627 resistance on route to 1.6668. On the down side, technical support is ascending at 1.6313, 1.6354 and 1.6394.

Sterling also strengthened against the euro, which failed to rally on growing business confidence in Germany. The EURGBP pair fell nearly 0.7 percent to 0.8247.

The US dollar failed to rebound on positive PMI data courtesy of Markit Group, which showed the world’s largest service economy expanded faster than forecast in January. The market’s subdued reaction was partly due to disappointing new home sales. US homebuyers snatched up 414,000 new homes in December, compared to 445,000 the previous month, official data from the Census Bureau showed.

Volatility in the forex markets could reach a boiling point Wednesday, depending on the outcome of the Federal Reserve policy meetings. The two-day meetings are scheduled to begin tomorrow in Washington.

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