Sterling regained traction on Friday and bounced well above 1.42 after strong upside rejection at 1.4344 on Thursday and subsequent dip to 1.4082 on conflicting comments about dollar’s direction from top US officials.
Fresh strength recovered over 61.8% of 1.4344/1.4082 fall, partially offsetting negative impact from Thursday’s red candle with long upper shadow which marked the first close in red of steep rally from 1.3457 trough.
Overall sentiment remains firmly bullish (the pair is on track for strong bullish weekly close) but overbought daily/weekly studies continue to warn about correction.
Release of UK Q4 GDP data is seen as key event for pound today. The pace of the UK economy’s growth is expected to stay unchanged at 0.4% in Q4, but annualized figure is forecasted lower for Q4 (1.4% f/c vs 1.7% in Q3).
Better than expected reading could lend fresh support to sterling for further advance and probes through immediate barriers at 1.4288 (cracked Fibo 76.4% of 1.5016/1.1930 post-Brexit vote fall) and 1.4397 (falling weekly 200SMA).
Conversely, GDP miss would have negative impact and risk retest of Thursday’s low at 1.4082 initially, with stronger dip to open lower pivot at 1.4043 (rising daily Tenkan-sen), loss of which will be bearish signal.
Res: 1.4264, 1.4317, 1.4344, 1.4400
Sup: 1.4163, 1.4107, 1.4082, 1.4043
