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US initial unemployment claims broke above the 300,000 threshold, rising to a seasonally adjusted 313,000 in the week ended November 22, which was the first time since early September. The four-week moving average of claims, considered a better gauge of labour market trends as it strips out weekly volatility, remained below 300,000 for an 11th consecutive week, adding to signs that the US job market was improving. Meanwhile, the Fed's closely looking gauge of inflation rose 1.6% on annualized basis, while on a monthly basis core PCE Price Index inched higher 0.2%, meaning that consumers are buying goods and services, thus stimulating the economy.
The British economy continues to rely on domestic spending, which drove the nation's economic output to a seventh consecutive quarter of expansion. Household spending climbed 0.8% in the three months through September, the most since the second quarter of 2010, according to the Office for National Statistics. The second official estimate of third-quarter GDP showed no revision to the quarterly growth of 0.7%. On an annual basis, the UK economy grew 3%, also unrevised from an earlier estimate. On the negative side, business investment decline of 0.7%, the first drop in more than a year, and exports fall of 0.4% weighed on the economy in the third quarter.
Volatility likely to be low
With many important news released on Wednesday and with the US bank holiday on Thursday, we are unlikely to see the volatility climbing. Although, UK nationwide HPI will be released tomorrow, which is the only release that could impact the pair to noticable matter.{ATTACHMENT}
GBP/USD tests upper trend-line
At the moment GBP/USD is testing the strength of the down-trend that started to take its shape at July, when the pair reached a six-year high at 1.7193. The pair's trading range is becoming narrower and that could potentially provoke a break-out. Since the Pound has reached this year's low just recently, we expect a bullish break-out to be the case; however, there still is a downside risk of the pair falling lower, if it fails to breach the monthly S1 at 1.5833.Daily chart
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Taking a look to the hourly chart to have a more detailed outlook on the pair in the short-term. Similar to the EUR/USD cross, the Cable reflected the yesterday's weakness of the US dollar and moved to the north. The pair crossed the 1.58 major and neared the weekly R2 four pips higher. At the same time, this level is strengthened by monthly S1 from above, meaning that the task to breach this line will be difficult. For now we assume the Pound is going to oscillate below this important resistance and continue gaining more bullish momentum.
Hourly chart
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