The euro and British pound made additional headway on Friday against the greenback, as EUR/USD hit an intraday high of 1.4052 while GBP/USD climbed to 1.5948, pushing RSI on the daily charts into overbought territory. Meanwhile, EUR/JPY rocketed nearly 200 points toward 133, keeping the pair contained to a wedge formation, while GBP/JPY finally broke above 150. Only the UK had economic news as UK GDP was confirmed at -1.9 percent in Q1, the sharpest drop since 1979, while the annual rate was confirmed at -4.1 percent, which matched the Q4 1980 low.
A breakdown of the report shows that private consumption fell for the fourth straight quarter at a rate of -1.2 percent, investment tumbled for the fifth straight quarter at a rate of -3.8 percent, and exports plunged by the most since Q3 2006 at a rate of -6.1 percent. The figures highlight part of the reason why S&P downgraded their outlook for the UK from “stable” to “negative,” and why the British pound could come under pressure once again in the near-term due to the bleak fundamental outlook. Indeed, when we see RSI rise into overbought territory, we tend to see at least short-term reversals, which could come as soon as next week for GBP/USD, and for that matter, EUR/USD.