The British pound dropped below key support around the 1.2800 level against the US dollar on Friday after some negatively-perceived economic and political news emerged from the UK on Thursday. First, the UK’s Q1 GDP estimate released on Thursday morning was revised down to 0.2% against prior forecasts of 0.3%.
Even more damaging to the recently-strengthening pound, however, was the latest opinion polling for the upcoming June 8th UK elections that was released late on Thursday. The poll, conducted by YouGov/The Times, suggested that UK Prime Minister Theresa May’s Conservative Party is now leading by only 5 points ahead of its closest rival, the Labour Party, down from a 20-point lead less than two weeks ago. This sharp reduction in the Conservative lead weighed heavily on the pound, as it raised questions on whether May would be able to secure enough of a majority and mandate to fend off Brexit hardliners and deal with difficult Brexit negotiations in a smoother, less turbulent manner.
On the US side, the dollar found some footing on Thursday and Friday after having spent much of the past two weeks in a virtual state of free fall against a few other major currencies, most notably the euro and Swiss franc. This relative stabilization for the dollar was helped along on Friday by a better-than-expected US Q1 GDP reading, which showed an annualized 1.2% growth rate – higher than both the previous reading of 0.7% and the consensus forecast of 0.9%.
The pound’s sharp fall and dollar’s modest bounce on Friday resulted in a tentative GBP/USD breakdown below key 1.2800 support, as previously noted. This level also coincided with a clear uptrend support line extending back to the mid-March low. Additionally, directly below current price action is the support provided by the key 50-day moving average. With any further relief rally for the US dollar ahead of next week’s pivotal US jobs report and/or more pound jitters ahead of the early-June UK election, a follow-through breakdown below the noted support for GBP/USD could begin to target the next major support objective around the 1.2600 level.
Investopedia does not provide individual or customized legal, tax, or investment services. Since each individual’s situation is unique, a qualified professional should be consulted before making financial decisions. Investopedia makes no guarantees as to the accuracy, thoroughness or quality of the information, which is provided on an “AS-IS” and “AS AVAILABLE” basis at User’s sole risk. The information and investment strategies provided by Investopedia are neither comprehensive nor appropriate for every individual. Some of the information is relevant only in Canada or the U.S., and may not be relevant to or compliant with the laws, regulations or other legal requirements of other countries. It is your responsibility to determine whether, how and to what extent your intended use of the information and services will be technically and legally possible in the areas of the world where you intend to use them. You are advised to verify any information before using it for any personal, financial or business purpose. In addition, the opinions and views expressed in any article on Investopedia are solely those of the author(s) of the article and do not reflect the opinions of Investopedia or its management. The website content and services may be modified at any time by us, without advance notice or reason, and Investopedia shall have no obligation to notify you of any corrections or changes to any website content. All content provided by Investopedia, including articles, charts, data, artwork, logos, graphics, photographs, animation, videos, website design and architecture, audio clips and environments (collectively the "Content"), is the property of Investopedia and is protected by national and international copyright laws. Apart from the licensed rights, website users may not reproduce, publish, translate, merge, sell, distribute, modify or create a derivative work of, the Content, or incorporate the Content in any database or other website, in whole or in part. Copyright © 2010 Investopedia US, a division of ValueClick, Inc. All Rights Reserved
Recommended Content
Editors’ Picks
EUR/USD corrects sharply toward 1.0950 ahead of US NFP, Powell
EUR/USD is extending its correction toward 1.0950 in the European session on Friday. The US Dollar has come up for air after the trade war and recession fears-led sell-off, weighing on the pair. Traders look to the US NFP report and Fed Chair Powell's speech for fresh directives.
GBP/USD remains heavy near 1.3000, US NFP data awaited
GBP/USD is battling 1.3000, under heavy selling pressure in European trading on Friday. Traders resort to profit-taking on their US Dollar short positiions, re-adjusting ahead of the critical US Nonfarm Payrolls data and Fed Chair Powell speech.
Gold price sticks to negative bias around $3,100; bears seem non-committed ahead of US NFP report
Gold price meets with a fresh supply on Friday, though the downside potential seems limited. Trump’s tariffs-inspired risk-off mood might continue to act as a tailwind for the precious metal. Fed rate cut bets weigh on the USD and also contribute to limiting losses for the XAU/USD pair.
Nonfarm Payrolls forecast: US jobs growth set to slow in March amid growing worries over US tariffs
Nonfarm Payrolls are forecast to rise by 135K in March, following a 151K gain reported in February. The United States Bureau of Labor Statistics will release the jobs data on Friday at 12:30 GMT. US labor data could impact the Fed’s interest rate path, potentially affecting the US Dollar's price action.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.