Buying sentiment towards the British Pound was dealt a severe blow on Friday following reports that the U.K economy grew much slower than expected in Q1.

U.K GDP growth slowed to 0.1% in the first quarter, much worse than the expected 0.3%, and its weakest since 2012. While the snow had some negative impacts on GDP, the bad weather really can’t bear all the blame – its effects on growth were small. Today’s dismal GDP figures have not only dented confidence in the health of the U.K economy, but also in the Bank of England’s ability to raise interest rates in May. With the Pound notorious for its extreme sensitivity to monetary policy speculation, further downside is likely as investors heavily reduce bets of a rate hike next month.

The British Pound collapsed like a house of cards following the downside surprise in the U.K GDP figures. An appreciating Dollar has not helped matters for the GBPUSD, with prices tumbling towards 1.3800 as of writing. The combination of Pound weakness and Dollar strength is likely to encourage investors to attack the GBPUSD ruthlessly moving forward. Focusing on the technical picture, the currency pair is turning heavily bearish on the daily charts. A breakdown below 1.3800 could encourage a decline towards 1.3700 and 1.3640, respectively.

Dollar Flexes Ahead of U.S GDP Release

King Dollar has appreciated against a basket of major currencies ahead of this afternoon’s estimate of first-quarter GDP growth.  Seasonal factors are expected to see GDP growth cool in Q1, but this could have little impact on the Dollar’s mojo. With rising U.S bond yields and expectations of higher U.S interest rates heavily supporting the Dollar, it is likely to hold its own against most majors. Focusing on the technical picture, the Dollar index remains firmly bullish on the daily charts. The current upside momentum could instill bulls with enough confidence to challenge 92.00. A breakout above 92.00 may result in a further incline higher towards 92.50. Alternatively, if bulls fail to break above the 92.00 level, prices could retrace back to 91.50.

Commodity spotlight – Gold

Gold prices wallowed at near five-week lows of around $1317 during Friday’s trading session as a strengthening Dollar, higher U.S bond yields and easing geopolitical tensions dented appetite for the safe-haven asset. The yellow metal is likely to receive further punishment if the Dollar continues to appreciate. Taking a look at the technical picture, Gold has scope to depreciate towards $1300 if bears can maintain control below $1324.