Final print of Q3 GDP from UK and US were released today but the results were disappointing. UK economy contracted -5.1% yoy in Q3, unchanged from prior estimate versus expectation of a revision to -4.9%. US Q3 GDP growth was revised down from 2.8% annualized to 2.2% annualized versus expectation of no revision. Sterling continues to be under pressure after the report and weakens broadly. Dollar, on the other hand, was supported by better than expected housing data and remains firm.
Other data released today saw US existing homes sales rose more than expected to 6.54M annualized rate in November. UK current account deficit narrowed to GBP -4.7B in Q3. Swiss trade surplus narrowed to CHF 2.14B in November. German Gfk consumer confidence for January dropped more than expected to 3.3. Australian conference board leading indicator dropped -0.3% in October.
Greece's bond rating was downgraded by the third agency today. Moody's lowered the rating from A1 to A2 and assigned it a negative outlook. However, Euro has little reaction to the news as the downgrade was not as worse as market speculated.
The dollar index managed to edge higher to 78.19 in earlier today but upside moment remains unconvincing. Another rise is still in favor as long as 77.58 minor support holds. A break of 77.58 will indicate that a short term top is formed and bring pull back, probably to 4 hours 55 EMA (now at 77.00) before resuming recent rally to 38.2% retracement of 89.62 to 74.19 at 80.08.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.5989; (P) 1.6076; (R1) 1.6123; More
At this point, intraday bias in GBP/USD remains on the downside and the current fall is still expected to extend to 100% projection of 1.6720 to 1.6166 from 1.6408 at 1.5854. Break there will bring a retest of 1.5706 cluster support next. On the upside, above 1.6098 minor resistance will turn intraday bias neutral and bring consolidations. But upside should be limited by 1.6408 resistance and bring fall resumption.
In the bigger picture, we're still favoring the bearish case that medium term rebound from 1.3503, which is is treated as a correction to down trend from 2.1161, has completed at 1.7043. Focus now turns to 1.5706 cluster support (38.2% retracement of 1.3503 to 1.7043 at 1.5691) for confirmation. Break there will argue that whole down trend form 2.1161 is likely resuming for a new low below 1.3503. On the upside, however, break of 1.7043 will indicate that rise from 1.3503 is still in progress to resistance zone of 1.7332/8236 (50% and 61.8% retracement of 2.1161 to 1.3503) before completion.