GBP/USD: Previous day's review
The pound weakened against the US dollar by about 1%, reaching the support level of 1.3300 yesterday.
Important events in the economic calendar:
The final data on UK GDP for the third quarter was released in the UK, where the pace of economic decline slowed down from -21.5% to -8.6%, against the forecasted slowdown to -9.6%, which is pretty good.
Market's reacted to the divergence of expectations at the time of the publication of statistical data, but it was extremely insignificant. Traders only earned +50 points, in favor of the pound sterling.
In the afternoon, the final indicator on US GDP for the third quarter was published, where the pace of economic decline slowed down from -9.0% to -2.8%, while expecting -2.9%. In quarterly terms, GDP growth was 33.4%, against the forecasted growth of 33.1%.
The reaction of the market was in favor of the US dollar.
What happened on the trading chart?
The price of the pound surged to the level of 1.3449 at the beginning of the European session, just at the time of the publication of the UK statistics, which was then followed by stagnation. During the US trading session, a downward interest arose, where the quote headed towards the support level of 1.3300. The main impulse for the decline was the US statistics, as well as the uncertainty in the Brexit trade negotiations.
EUR/USD: Previous day's review
The Euro showed an active downward interest yesterday, returning the quote to the area of the support level of 1.2150.
There are no noteworthy statistics published in Europe. As a result, the main emphasis was on statistics from the United States, which favored the positions of the US dollar.
The reaction of the market to statistics was reflected through a sharp price decline on the trading chart, which brought us to the area of the pivot point 1.2150, where the rebound occurred.
Trading recommendation for GBP/USD on December 23
Today, the weekly data on applications for US unemployment benefits will be published, where volumes are expected to increase.
The volume of repeated applications for benefits may increase by 50 thousand – from 5,508 thousand to 5,558 thousand.
The number of initial applications is expected to remain unchanged – 885 thousand, but their growth is not excluded.
At the same time, data on orders for durable goods for November will be published, where the forecasted growth was only 0.6% against 1.3% in the previous period.
If the statistics are confirmed, the US dollar may weaken.
Moreover, we should also follow the Brexit information flow, as there is no time left for trade negotiations between the UK and EU. Thus, any information about whether there is progress in the agreement or not, strongly affects the market.
Market's course of action on the Brexit information flow:
- Positive news around Brexit leads to the pound's strengthening.
- Negative news around Brexit leads to the pound's weakening.
US statistics were not the best in terms of technical analysis. Therefore, it can be assumed that the pound's price may still rise towards the previous day's high of 1.3468, after which stagnation is expected.
It is worth noting that in the event of a Brexit information flow, technical analysis and statistical data may be blocked.
Trading recommendation for EUR/USD on December 23
The only thing that will be published today is US data, which may affect the value of the US dollar in terms of its weakening.
- USA 13:30 Universal time - Applications for employment benefits
- USA 13:30 Universal time - Volume of orders for durable goods (Nov)
Technically speaking, a reversal in the direction of 1.2240 can be expected, if the price fails to consolidate below the level of 1.2150. This will be another link in the formation of a flat at the peak of the medium-term upward trend.
If we still consider the downward movement after holding the quote below the level of 1.2150, then there is a chance of a further decline to the range of 1.2120-1.2070 in the future, due to the high degree of overbought Euro.
