The pound has clawed its way back above the 1.30 line. Still, this week's soft GDP release underscores a weak British economy, which could dampen investor sentiment towards the pound.
GBP/USD has recorded slight gains on Wednesday and has managed to erase the losses seen at the start of the week. Currently, the pair is trading at 1.3031, up 0.12% on the day.
The British economy continues to struggle. The monthly GDP report for November pointed to contraction in the economy, with a reading of -0.3%. This missed the estimate of zero. The indicator, which helps analysts track quarterly GDP on a monthly basis, has not posted a gain since July. Recent dovish comments from the Bank of England have weighed on investor confidence and the pound found itself in 1.29-territory on Monday and Tuesday. If British numbers continue to miss their forecasts, I expect the pound to lose ground.
The key line of 1.30 remains relevant for GBP/USD. Currently, this line is providing weak support. Close by, the 50-EMA is at 1.2989. This is followed by support at 1.2950, which was under strong pressure on Tuesday. This line could be tested during the week.
On the upside, there is immediate resistance at 1.3050, followed by resistance at the round number of 1.3100.
After starting the week with losses, USD/CNY has leveled off on Wednesday. Currently, the pair is trading at 6.8842, up 0.01% on the day. There are no Chinese events on the schedule. On Thursday, China releases New Loans, which is expected to drop to 1250 billion yuan in December, down from 1390 billion a month earlier.
AUD/USD is trading sideways on Wednesday, as investors look for cues. The pair is currently trading at 0.6897, up 0.03% on the day. There are no Australian events on the schedule.
NZD/USD continues to tread just above the 0.6600 line. Currently, the pair is trading at 0.6614, up 0.01% on the day. In economic news, New Zealand will release Business NZ Manufacturing Index on Thursday. The indicator has shown slight expansion in the previous two releases, with readings just above the 50-level.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.
