The GBP/USD pair was offered after the domestic data showed the UK public debt worsened in October. The pair took out support at 1.4865 and fell to 1.4807 levels in the NY session. The upward revision of the US Q3 core personal consumption expenditure figure added to the bearish pressure on the pair.
Eyes UK data
The UK third quarter GDP release due for release today growth rate unchanged at 2.3% y/y and 0.5% q/q. Meanwhile, the current account deficit is seen widening to GBP 21.50 billion.
The GDP number could turn out to be a non-event unless the figure is revised higher/lower. A downwardly revised figure could weigh over Sterling and vice versa. Meanwhile, a widening of the Q3 current account deficit could easily overshadow an upbeat GDP figure and push sterling lower. The UK current account to GDP ratio has hit record lows for last three years and may hit another record low this year as well since the goods trade deficit with EU and non-EU countries has been on the rise
Technicals – intraday bias is sideways to negative
Sterling has recovered to 1.4850 levels, but a bearish break below 1.4865 has opened doors for a drop to falling channel (violet line) support now seen at 1.4784.
However, the 4-hour RSI hit the oversold territory, hence a minor correction to 1.4865-1.4888 (76.4% of Apr-Jun rally) & 1.4895 (Dec 2 low) cannot be ruled out.
The trend stays bearish and a failure to take out/sustain above 1.4865 could see the pair drop to 1.4784 levels.
Only a daily close above 1.4925 (falling channel resistance) could increase the possibility of a sideways action to bullish action in the short-term. The pair is likely to be offered on rallies so long as it trades below 1.4925 levels.
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