After perking back above the 2.0 mark, the British pound has been struggling to hold above that level. Economic data out of the UK has been solid, but the surprises have not been meaningful enough to push the GBP/USD to a new multi decade high. UK GDP printed at 0.7 percent in the first quarter, matching the rise in the fourth quarter.
Unfortunately, the underlying weakness in the report was enough to hold back pound bulls. Construction sector growth was strong, but the service sector and industrial output weakened. The housing market has been the primary driver of growth and we expect this to continue to be reflected in incoming data. The only UK data left for release this week is the Nationwide House price report tomorrow. Expect house prices to continue to grow. The Bank of England is on track to raise interest rates in May which could keep the currency inflated until then.