FX round-up: Sterling's flirtations with $1.30 denied by UK growth disappointment

Sterling's flirtations with convincingly crossing the $1.30 resistance mark were dealt a blow by disappointing UK first-quarter gross domestic product (GDP) growth data out this morning.

That second-estimate number put UK growth at just 0.2% for the first three months of 2017, down from previous estimates of 0.3% and well shy of fourth-quarter 2016's 0.7%.

"Some solace can be taken from signs of a seasonal effect whereby the first quarter has been poor for the last three years," said Jasper Lawler at London Capital Group.

"We think any resulting softness in sterling will be short-lived as long as the politics trumps economics in the run up to the general election."

Sterling's day range was $1.2932-$1.3015, but by 17:04 BST it was trading down 0.13% to $1.2955. It was down 0.15% to €1.1546.

Chris Saint at HL Currency Service said Office for National Statistic's commentary confirmed that rising inflation was weighing on household spending.

"A weak trade performance will also be a big cause for concern, denting hopes that UK exporters can make the most of the tailwind from sterling's post-referendum decline. which makes their products cheaper in overseas markets," said Saint.

Craig Erlam of Oanda said, with reference to sterling, that it appeared there had been something of a reluctant rally over the last month and thought perhaps the sell-off that seen in the pair this morning was a reflection of that.

"Should the pair break below $1.29, it could signal a sharper downturn in the coming weeks," said Erlam.

Sterling was up on the aussie, loonie and yen, but fell on the kiwi and rand.

The dollar put in a mostly firmer performance after last night's Federal Open Market Committee's release of minutes for its meeting earlier in May.

"Federal Reserve minutes kept a June rate hike on the table but showed no rush to normalise the QE-bloated balance sheet," said Lawler.

"The dollar's outlook is clouded because it's still unclear if the Fed will halt rate-increases as it unwinds the balance sheet," he said.

The greenback improved on the aussie, loonie, kiwi and yen, but was down 0.06% to €0.8909. David Madden at CMC Markets UK added that the Fed minutes were from the meeting at the beginning of May.

"The US has reported some weak data since then, and when you factor in the scandal surrounding Mr Trump, there is no guarantee that interest rates will be moved higher in June."

Erlam looked at the US rate rise chatter and commented that the weakness in the dollar -- with another downturn over the last couple of weeks -- was certainly helping to support cable (GBPUSD).

"But with a rate hike likely at the June meeting, I wonder whether this will continue."