US consumer spending, which accounts for 70% of the US economy, rose in November as lower gasoline prices and gains in wages provided a boost to the holiday shopping season, urging the biggest gain in retail sales in eight months and giving the economy a lift. Sales of US retailers increased 0.7% in November, stronger than the projected rise of 0.4% and the best result since March, following an upwardly revised 0.5% advance in October, the Department of Commerce said. Core retail sales, which exclude automobiles, rose 0.5% in the reported month. With the rapidly strengthening labour market and some early signs of greater wage pressures, domestic households should help the world's number one economy to sustain robust growth even in light of a deteriorating situation in Europe, Japan and China.
Meanwhile, The gap between the amount of British imports and exports narrowed to the lowest level in seven months in October, but weakness in trade remained a drag on the country's economic growth. According to the Office for National Statistics, the UK trade deficit in goods was 9.6 billion pounds in October, down from a revised 10.5 billion pound deficit in September. The narrowing of the difference between how much the UK purchases and sells abroad was due to a jump in exports, particularly a rise in silver exports, for which India was the top destination. At the same time, imports fell as Britain bought less oil from countries outside the European Union. Imports declined by 0.7 million pounds, with fuel imports dropping 0.9 billion pounds.
US PPI and UoM inflation expectations
The first three days of the week were relativvely calm; however, today we will have a couple of important data from the world's biggest economy. We are waiting for US PPI and preliminary UoM inflation expectation releases that will give us a further guidance of the economic situation in the US.GBP/USD appreciates above down-trend resistance line
Already for more than a month GBP/USD is testing the strength of the down-trend, especially its upper trend-line, that started to take its shape on 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 downisde risk of the pair falling lower, if it fails to breach the monthly R1 at 1.5921.Daily chart
The GBP/USD cross has left the boundaries of a long-term downtrend; however, it is trading just slightly above it and there is a rather big possibility of the pair returning in the trading range. To continue appreciating and to leave the trend behind the Sterling has to breach the monthly PP that is located at 1.5755, which will not be an easy task.
Hourly chart