British pound slides after weak UK GDP data

The British pound declined today after relatively weak economic data from the United Kingdom. In a report earlier today, the Office of National Statistics (ONS) showed that the UK economy declined by 2.6% in November as the country continued to place limitations to slow the spread of the new strain of the virus. The industrial production declined by 0.1% leading to an annualised decline of 4.7%. Similarly, the manufacturing production rose by 0.7% after rising by 1.6% in the previous month. The country’s trade was also under pressure as the trade deficit increased by more than £16 billion in November. 

The US dollar rose today even after the relatively dovish statement by Jerome Powell, the Fed Reserve. The currency also reacted to the mixed economic numbers from the US. According to the Bureau of Statistics, the overall retail sales declined by 0.2% in December as most states placed limits on movement. The core retail sales declined by 0.1% during the month. Meanwhile, industrial and manufacturing production rose by 0.5% and 0.4%, respectively. The producer price index, which is an important measure of inflation, rose by 0.2% and an annualised rate of 1.3%. 

Global stocks pared-back gains made early this week after Joe Biden unveiled his $1.9 trillion stimulus package. The package will allocate $1,400 to individuals, putting the total check offered this year to $2,000. It will also boost the unemployment insurance package. Also, the funds will go towards vaccine distribution, schools, and states and local governments. Still, there are concerns about whether the incoming president will get enough votes for these priorities. 

EUR/USD

The EUR/USD pair declined to an intraday low of 1.2133, which was slightly above this week’s low of 1.2100. On the four-hour chart, the price is slightly below the 23.6% Fibonacci retracement and the 15-day and 25-day moving averages. The DeMarker has also moved below the oversold line, which is a sign that bears are in control. Therefore, the pair will likely continue falling as bears target the 38.2% retracement level at 1.2062.

GBP/USD

The GBP/USD pair declined today after the weak economic data from the UK. It is trading at 1.3643, which is substantially lower than the intraday high of 1.3717. On the four-hour chart, the pair is still below the upper side of the ascending channel. It is also still slightly above the 25-day exponential moving average while the signal and histogram of the MACD are above the neutral level. Therefore, the pair will likely continue falling, with the next level to watch being 1.3600.

USD/JPY

The USD/JPY pair declined slightly today in reaction to the statements by Biden and Powell. It is trading at 103.66, which is lower than the year-to-date high of 104.40. On the four-hour chart, the 25-day and 50-day exponential moving averages have made a bearish crossover. Also, the signal and histogram lines of the MACD have moved below the neutral level. The next level to watch is the support of 103.54. If it drops below this level, it will possibly lead to further declines to 103.00.