The British pound continued to be stronger against the other major currencies in the Asian session on Tuesday, as traders await the U.K. first quarter GDP data, due later in the day.
Speculation rose that if the GDP results showed unexpected pickup, it is likely to boost interest rate expectations.
In the minutes of Bank of England released last week, the nine-member monetary policy committee hinted about an optimistic view about the economy.
The Office for National Statistics is set to release first estimate for the March quarter GDP, later in the day. The U.K. economy is expected to grow 0.5 percent sequentially after expanding 0.6 percent in the fourth quarter of 2014.
Investors are trading cautiously ahead of the U.S. Federal Reserve’s two-day monetary policy meeting that starts later in the day.
It remains unlikely that the Fed will hike interest rates before July, but markets are looking for some clarity on the timing of tightening when the Fed releases its statement on Wednesday.
A recent batch of disappointing economic data has led many analysts to predict that the Fed will delay its first rate hike until later this year.
Monday, the pound was trading higher against the other major currencies, as some hedge funds bet on a risk-free election and government, as well as the general election draws closer. The pound rose 0.48 percent against the U.S. dollar, 0.31 percent against the yen, 0.46 percent against the Swiss franc and 0.06 percent against the euro.
In the Asian trading today, the pound rose to a 5-day high of 0.7135 against the euro, from yesterday’s closing value of 0.7146. If the pound extends its uptrend, it is likely to find resistance around the 0.70 area.
The pound advanced to a 1-1/2-month high of 181.57 against the yen, from yesterday’s closing quote of 181.33. On the upside, 184.10 is seen as the next resistance level for the pound.
Data from the Ministry of Economy, Trade and Industry showed that the total value of retail sales in Japan tumbled 9.7 percent on year in March, coming in at 12.396 trillion yen. That missed forecasts for a decline of 7.5 percent, following the 1.7 percent contraction in February.
On a seasonally adjusted monthly basis, retail sales dipped 1.9 percent versus expectations for an increase of 0.6 percent after gaining 0.7 percent a month earlier.
Against the U.S. dollar and the Swiss franc, the pound edged up to 1.5244 and 1.4564 from yesterday’s closing quotes of 1.5233 and 1.4542, respectively. The pound may test resistance near 1.55 against the greenback and 1.47 against the franc.
Looking ahead, U.K. BBA mortgage approvals for March, first quarter U.K. GDP and the U.K. index of services for February are due to released in the European session.
In the New York session, U.S. S&P Case-Shiller home price index for February and U.S. consumer confidence index for April are slated for release.
At 1:30 pm ET, European Central Bank Governing Council member Jens Weidmann is expected to speak at political forum, in Essen, Germany.
The material has been provided by InstaForex Company – www.instaforex.com