The growth of risky assets slowed yesterday after many investors began closing their positions. Not only is this caused by month-end flows, but also because of the report that US GDP grew much better this first quarter. According to the data, real GDP jumped by 6.4%, slightly higher than the expected 6.0%. This proves that the US economy is returning to its previous shape, especially amid the easing of lockdowns and more rapid pace of vaccinations.
Of course, the massive stimulus from the government helped a lot as it fueled consumer spending. The US Department of Commerce said it was able to raise spending by as much as 10.7%, which is obviously greater than the 2.3% growth the indicator experienced last quarter.
Core CPI also increased, by roughly 2.3%. Unsurprisingly, government spending swelled to 6.3%, which is the highest rate recorded since 2002. The cost of local goods and services also rose to $ 19.1 trillion, and in the near future it is expected to outperform the pre-pandemic peak of around $ 19.3 trillion.
All this resulted in the euro halting growth and proceeding to trade sideways. Now, bullish traders need to push the quote above 1.2145 so that the euro can reach 1.2180 and 1.2240. But if the quote drops below the 21st figure, the euro will collapse to 1.2060 or much lower price levels.
The US also reported that jobless claims dropped very sharply last week, so now it is only at 553,000. This means that the labor market is recovering at a good pace, however, it is still not enough to change the Federal Reserve's position on monetary policy.
The less volatile four-week moving average also fell to 611,750, according to the US Department of Labor.
The housing sector also reported good gains yesterday. The data from the National Association of Realtors said pending home sales jumped 1.9% in March, after falling by 11.5% last February. This increase indicates a strong demand for housing, which is probably because of low mortgage rates and the recovery in the labor market.
Another good news is that many states are already easing restrictions related to the coronavirus. New York announced that they will completely lift the lockdown on July 1, despite the disagreements of some officials. Chicago also started to ease restrictions, while Michigan said they will do it once vaccination targets are met.
With regards to GBP / USD, bullish traders need to push the quote above 1.3970 so that the pound will be able to reach 1.4020 and 1.4065. If not, they will have to defend 1.3920 as a break below will lead to a collapse towards 1.3860 and 1.3800.