Sentiment towards the Pound was dealt a blow on Thursday, after Britain’s Gross Domestic Product growth in the final quarter of 2017 was unexpectedly revised down.

The Office for National Statistics reported that the UK economy grew just 0.4% in Q4 of 2017; down from the 0.5% preliminarily estimate last month. Annual growth for 2017 was also revised down from 1.8% to 1.7%. While today’s disappointing GDP report is unlikely to derail the Bank of England from its current hawkish path, it could raise fresh questions amongst investors over Britain’s economic outlook this year. These questions may breed uncertainty, consequently leaving the Pound vulnerable to further losses.

Taking a look at the GBPUSD, a strengthening Dollar has instilled bears with enough inspiration to drag the currency pair below 1.3900. Repeated weakness below the 1.3900 level could encourage a decline towards 1.3850 and potentially lower.

Dollar climbs on hawkish FOMC minutes

Dollar bulls were in the building on Wednesday evening after January’s hawkish FOMC meeting minutes reinforced market expectations over higher US interest rates this year.

The Federal meeting minutes showed optimism over the economic outlook with policymakers increasingly optimistic about inflation eventually reaching the 2% target.  A key takeaway from January’s meeting minutes was how a majority of Fed members agreed that recent “strengthening of the economy increased the likelihood of further gradual rate increases”. Bullish investors warmly welcomed the hawkish remarks with the Dollar Index jumping towards 90.20 on Thursday morning. From a technical standpoint, the Dollar Index has the potential to challenge 90.55 following the daily close above 90.00.

Commodity spotlight – WTI Oil

It is interesting how oil prices edged lower on Thursday morning, despite the American Petroleum Institute on Wednesday reporting an unexpected drawdown in US Crude inventories.

There is a strong possibility that the primary culprit behind oil’s recent decline could be a strengthening US Dollar amid prospects of higher US interest rates. While some may argue that WTI Crude remains supported by OPEC’s commitment to tighten markets, price action seems to suggest otherwise as bears linger in the background. With fears mounting over surging production from US Shale potentially sabotaging efforts by OPEC to tackle the oversupply glut, oil prices remain exposed to downside risks.

Investors will direct their attention towards the Energy Information Administration’s (EIA) inventory data this afternoon, to see whether US production continues to rise. A build in inventories has the ability to fuel the oversupply fears consequently punishing WTI Crude. Focusing on the technical picture, WTI could tumble towards $60 if bears are able to secure a solid daily close below $61. Alternatively, a breakout above $61.80 could invite an incline higher towards $62.50.

Currency spotlight – EURUSD

The Euro edged slightly lower against the Dollar on Thursday ahead of the anticipated ECB Monetary Policy Meeting Accounts, scheduled for release this afternoon.

Euro bulls could receive a welcome boost if the accounts offer fresh insight into the central bank's thoughts on quantitative easing and inflation. Focusing on the technical picture, the EURUSD is coming under noticeable pressure on the daily charts, thanks to a strengthening Dollar. Repeated weakness below the 1.2300 level could encourage a decline towards 1.2180. Alternatively, a breakout back above 1.2300 may invite an inline towards 1.2350 and 1.2440, respectively.

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