Dollar continues to stay in tight range today as European stocks consolidates while US stocks are set to open slightly lower. There is no sign of reversal in the greenback yet as Gold pares earlier loss and is back above 1100 level after brief retreat. Crude oil is also back above 79 level after dipping to 78.85. The economic calendar in US is empty today and considering bank holiday in US tomorrow, markets might continue to consolidate in range for a while.

Sterling is the worst performing today after Fitch co-head of global sovereign ratings said that UK is the major economy that's most at risk of losing its AAA rating because it needs the largest budget adjustment. Fitch expects the UK government will articulate a stronger fiscal consolidation program next year, and has a stable outlook for the country's rating. UK RICS house price balance for October improved more than expected to 34%. The data means the number of real-estate agents saying prices rose exceeded those reporting declines by 34 percentage points, a significant improvement over September's 21 percent points. BRC retail sales Monitor rose 3.8% in October, also much better than September's 2.8%. Trade deficit widened more than expected to GBP -7.19B in September.

German ZEW economic sentiment dropped much more than expected from 56 to 51.1 in November. Eurozone ZEW also dropped sharply from 56.9 to 51.8. The indicator, which is a gauge for predicting developments six months ahead, suggests that investors are not expecting strong growth next year.

Released from Japan, current account surplus came in less than expected at JPY 1.34T in September. Eco Watcher survey also missed expectation by dropping to 40.9 in October. Machine tools orders dropped -42.6% yoy.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.6635; (P) 1.6739; (R1) 1.6862; More

Intraday bias in GBP/USD remains neutral for the moment. Retreat from 1.6841 might extend further to 4 hours 55 EMA (now at 1.6544). But downside should be contained above 1.6465 support and bring another rise. Above 1.6481 will target 1.7043 medium term resistance next. However, break of 1.6465 will indicate that rise from 1.5706 has completed and will turn focus to 1.6261 support for confirmation.

In the bigger picture, break of 1.6740 resistance argues that fall from 1.7043 has completed at 1.5706 already. The three wave structure of such fall suggests that it's merely a correction in the larger rally from 1.3503. In other words, such medium term rally from 1.3503 is still in progress and another high above 1.7043 should be seen. On the downside, break of 1.6261 is needed to signal that rise from 1.5706 has completed and turn focus back to this support. Otherwise, outlook will remain bullish now.

GBP/USD