The GBP/USD pair struggles to capitalize on the previous day’s sharp intraday rally of over 100-pips and edges lower during the Asian session on Friday. Spot prices currently trade near the 1.3400 mark as investors keenly await further developments surrounding the Middle East crisis and the UK macro data dump.
US President Donald Trump said on Thursday that a deal had been reached with Iran and the final document could be signed soon, perhaps even over the weekend. The announcement provided a massive boost to the global risk sentiment, which weighed heavily on the safe-haven US Dollar (USD) and prompted aggressive intraday short-covering around the GBP/USD pair. The optimism, however, remains capped as Iran countered that it had not reached a final decision on an agreement.
Iran’s Foreign Ministry reportedly said that key issues, including the Strait of Hormuz and frozen funds, are still unresolved. Furthermore, Iranian forces blocked a tanker from transiting through the strategic waterway without coordination, underscoring the uncertainty over Iran’s position. This, in turn, assists the US Dollar (USD) to attract some dip-buyers following the previous day’s sharp pullback from the vicinity of the monthly high, which, in turn, acts as a headwind for the GBP/USD pair.
Meanwhile, the hot US Producer Price Index (PPI) for May bolsters market bets that the US Federal Reserve (Fed) will hike interest rates by the end of this year. The outlook turns out to be another factor that supports the Greenback and contributes to capping the GBP/USD pair. Traders, however, seem hesitant and opt to wait for the UK macro data dump, including the monthly GDP report, before placing intraday directional bets. Nevertheless, spot prices remain on track to register strong weekly gains.
Economic Indicator
Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
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