GBP/USD - Focus on growth differential, rising wedge pattern on the charts

GBP/USD clocked a high of 1.3159 on Thursday before falling to 1.3051 on the back of a super strong US durable goods orders print. The currency pair regained some poise in Asia to trade around 1.3080 levels. 

Focus on growth differential

Official figures from the Office for National Statistics released on Wednesday showed the UK GDP grew by 0.3% in the quarter. The annualised growth was 1.7%. The 0.3% growth in the second quarter marks the second slowest growth since the beginning of 2016 and one of the weakest across Europe. 

The other side of the story - preliminary US Q2 GDP reading will released today at 12:30 GMT. The data is expected to show the US economy expanded at an annualised rate of 2.6% in Q2 vs. 1.4% in Q1. A strong GDP print would add credence to the Fed’s view that the Q1 slowdown was transitory and push the treasury yields and the US dollar higher. 

An improvement in the employment cost index and core PCE could also bode well for the US dollar. 

Kathy Lien from BK Asset Management writes, “Q2 U.S. GDP numbers are scheduled for release on Friday and softer numbers will seal the dollar's fate.  Although economists are looking for a sharp increase in growth, the softer level of spending and trade between April and June versus January and May puts the risk to the downside for Friday's report.” 

GBP/USD Technicals

The daily chart shows a rising wedge pattern. The 14-day RSI is flat lined in the bullish territory. The wedge resistance stands around 1.3192, while the support is seen around 1.2990. 
FXStreet Chief Analyst Valeria Bednarik says, “the downward potential remains limited according to the 4 hours chart, as the price is holding above a its 20 SMA, whilst technical indicators have eased their downward strength within positive territory, having corrected overbought conditions. The pair set a daily low of 1.3050, with a break below it favoring a deeper correction towards 1.2965.”