GBP/USD saw a flat day of trading after initially exploring some downside. The pair closed with price action getting stuck at the 1.2200 level, following a two-day winning streak.
Key Economic Data:
UK GDP Growth: UK GDP rebounded in November with a modest 0.1% MoM growth, but it missed the expected 0.2%. This slight recovery from the previous -0.1% contraction failed to instill much confidence in the market.
UK Industrial Production: The figure showed a contraction of 0.4% in November, significantly missing the forecasted growth of 0.1%. This came after the previous month’s decline of -0.6%.
US Retail Sales: In the US, Retail Sales increased by 0.4% MoM in December, below the forecast of 0.6%. Core Retail Sales (excluding automotive) also rose by 0.4%, which met expectations but did little to move the market in a significant direction.
Outlook for Friday:
UK Retail Sales: Retail Sales figures for December are set to be released early Friday, with expectations for a rebound to 0.4% from November’s 0.2%. On an annual basis, a more substantial jump of 4.2% is forecast, which might be an optimistic target given recent trends of missed expectations in the UK economy.
GBP/USD Technical Forecast: GBP/USD remains under pressure despite some intraday upside. The pair tested fresh 15-month lows last week, with bids bouncing off the 1.2100 mark, but it has failed to regain any significant bullish momentum.
Technical Levels: GBP/USD is facing a tough time reclaiming the 1.2200 level, which has now become a point of resistance. A sustained break above this level could suggest a potential recovery, but given the recent bearish trend, this seems unlikely for now. The overall technical landscape remains unfriendly to GBP bulls, with the pair likely to face ongoing pressure from the broader downtrend.
Monthly Outlook: The pair is heading towards its fourth consecutive monthly close in the red, which signals a continued bearish market sentiment. Technical oscillators are deeply entrenched in bearish territory, indicating limited potential for a short-term reversal.
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