British pound rallies after strong UK GDP data
The British pound rallied today after the relatively strong third quarter GDP data from the UK. According to the Office of National Statistics (ONS), the UK economy bounced back by 16% in the quarter. It performed better than the consensus estimates of 15.9%. On an annualised basis, the economy contracted by 8.6%, better than the previous estimate of 9.6%. In the same quarter, business investment increased by 9.4% leading to a year-on-year decline of 19.2%. Meanwhile, the UK continued to borrow in November as the government continued to provide support to the economy. It borrowed more than £30.85 billion, up from the previous month’s £20.94 billion.
The Australian dollar declined against the US dollar even after the country released relatively strong economic numbers. According to the country’s Bureau of Statistics, the overall volume of retail sales increased by 7% in November. The sales rose by 13.2% on an annualised basis. The bureau attributed the sales increase to the recent Black Friday sales events and the reopening of Victoria state. Perhaps, the Aussie dropped because of the overall weakness of commodities as the prices of copper, nickel, and iron ore dropped today.
The US dollar continued to rally as worries of the new strain of coronavirus continued. The currency rose against its key peers like the euro, Japanese yen, and the Canadian dollar. It also reacted to the decision by the House of Representative and Senate to pass the $900 billion stimulus bill. The bill will provide funds directly to individuals, companies, and state and local governments to help them in the recovery process. Further, the currency rose after the US released the final reading of Q3 GDP data. The numbers showed that the economy expanded by 33.4% in the quarter.
The EUR/USD eased to an intraday low of 1.2200 as the dollar strength continued. On the four-hour chart, this price is along the 25-day and 15-day EMAs. It is also between the support and resistance levels at 1.2130 and 1.2274, respectively. At the same time, the signal and main lines of the MACD indicator have continued to fall. Therefore, the pair will possibly remain in the current range during the American session.
The GBP/USD pair rose to an intraday high of 1.3500 as the market reacted to the latest news on Brexit and the new virus variant. On the four-hour chart, the price is slightly above the ascending yellow trendline, signalling that bulls are still in control. It is also at the same level as the short and longer-term moving averages while the average true range (ATR) has started to rise. Therefore, the pair’s volatility will likely continue during the American session.
The AUD/USD pair dropped to an intraday low of 0.7530 even after the strong Australian retail sales. On the hourly chart, the pair moved below the short- and longer-term moving averages. It has also formed a head and shoulders pattern with the neckline being at 0.7460. The RSI and momentum indicators have also dropped. Therefore, the pair will possibly continue falling as bears aim for the neckline level at 0.7460.