- There are more sell orders 100 pips from the spot than yesterday - 60%
- GBP/USD is challenging a major support at 1.55
- The major down-trend at 1.565 to remain intact
- Upcoming events: US mortgage Applications, US Continuing Jobless Claims, US Initial Jobless Claims
The British economic growth remained unchanged in the third quarter, bolstered by a strong services sector and solid growth in household spending. On an annual basis, however, the UK economic output was downgraded to 2.6%, down from 3.0% estimated earlier. On the output side, all sectors enjoyed increases with production, construction and services all rising in the three months through September of 2014. While production output climbed 0.2% in the third quarter compared to the previous quarter, output in mining and quarrying, including oil and gas extraction, dropped 1.6%. Construction output edged up 1.6% as a whole and has advanced 5.7% since the third quarter of last year.
In a separate release, Britain's current account deficit matched a record high in the third quarter, hurt in large part by lower returns on foreign investment. The Office for National Statistics said deficit came in at 27 billion pounds in the third quarter, up from 24.3 billion in the previous three-month period and considerably worse than economists' predictions of a 23 billion pounds. The data means the gap now makes up 6% of GDP, up from 5.5% in the second quarter. Meanwhile, the number of new mortgage approvals fell to 36,717 in November, compared with 37,153 a month earlier but above market estimates, the British Banking Association said. November's reading was the lowest since April 2013 and 20% down on an annual basis.
Macroeconomic news move into the background
This week's main fundamental day has already passed, granting us with plenty of new information to help guess the tendencies next year and leaving us without any potentially game-changing events until the end of 2014, at least from the UK side. And while the volume together with volatility is expected to remain low until the weekend, Tuesday the activity may increase on the US Consumer Confidence date.
GBP/USD probes tough support at 1.55
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 has returned to trade inside the boundaries of the down-trend, after braching it to the upside. The pair is hovering around the lower levels this year, namely around 1.550 and there still is a downside risk of the pair falling lower, since it is back on its down-trend.Daily chart
Having taken the support at 1.56 out of the way, GBP/USD is currently putting a lot of pressure on 1.55, which in turn does not appear to be an easy target. The demand the currency pair is facing right now is implied by the weekly and monthly S1 levels, meaning there is a substantial risk of a bullish correction extending to a major trend-line at 1.565 before the Cable dives to 1.53 and thus continues its journey towards the 2013 low at 1.48.
Hourly chart
Sentiment stands bullish, but more traders plan to sell
As for the pending orders placed 100 pips from the spot price, the percentage of the sell ones keeps growing—it has already reached 60%.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Pound to slide lower
Community member khalidamassi considers the fact that GBP/USD is still trading above 1.555 as positive, but does not expect the volatility to elevate because of the holidays. Jignesh, on the other hand, has a different opinion, saying that "bears will be looking to take over again this week, on the back of a hawkish FOMC statement from the last week. First targets will be recent lows coming in at 1.5540". At the same time he sees the resistance at 1.5680/60.