'The market is bid above the 55 day ma at 1.2417 and the near term risk remains on the topside. We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low.' – Commerzbank (based on FXStreet)

Pair's Outlook

In spite of a strong UK GDP reading, the GBP/USD currency pair was unable to pierce the immediate resistance cluster, resulting in a small bearish correction, with a slip below 1.26 again. The same cluster keeps providing strong resistance today around 1.2670, implying that the Pound is to weaken against the US Dollar for the second day. The nearest demand area rests around 1.2515, which could limit possible losses, while another strong group supports is located at 1.2430, namely the monthly PP and the 55-day SMA. However, technical indicators in the daily timeframe suggest the Cable is to inch higher; nevertheless, the immediate resistance is expected to remain intact.

Traders' Sentiment

Traders' sentiment remains bullish at 62%, while the portion of purchase orders edged higher over the day, namely from 46 to 51%.

'The dollar will shift into 105-110 yen range, and around the turn of the year, it's possible it will break 100 yen.' – Eisuke Sakakibara, a former top currency official at Japan's Finance Ministry (based on Bloomberg)

Pair's Outlook

A strong rally on Thursday caused the USD/JPY pair to breach the four-week down-trend, with even the second resistance area failing to limit the gains. The Buck is poised for another bullish development today, with the main target being the 116.00 mark, where the weekly R1 and the monthly PP are located at. The Greenback, however, is likely to struggle at reaching this level, as it has another supply area on its path circa 114.90, formed by the 20 and the 55-day SMAs. Moreover, technical indicators are unable to confirm this outlook, as they are giving mixed signals today.

Traders' Sentiment

Market sentiment is now equally divided between the bulls and the bears. At the same time, the share of purchase orders added nine percentage points, having risen to a total of 69%.

'Most of Asia is already off for the holidays, which is a good time for many to short the metal ... You can see the bids are very weak, which shows the demand right now.' – Ronald Leung, Lee Cheong Gold Dealers (based on Reuters)

Pair's Outlook

The yellow metal continues its way lower, as it entered its fourth consecutive session of decline on Friday. However, the bullion has stopped in the middle of a strong support cluster, which is made up of the weekly S2 at 1,185.14, monthly R1 at 1,184.64 and the 23.60% Fibonacci retracement level, which is located at 1,182.37. As already during the morning hours the metal managed to reach out below the cluster, it can be assumed that it is not strong enough to keep gold from continuing to decline in the near future. In such case, it is most likely set to fall as low as 1,176.66 level, where the 55-day SMA is located at.

Traders' Sentiment

SWFX traders are neutral regarding the yellow metal. In the meantime, 58% of trader set up orders are to buy the metal.

'The worrisome scenario is that the run-up in mortgage rates over the past few months has taken a chunk out of demand'. - Stephen Stanley, Amherst Pierpont Securities

Sales of new homes in the Unites States dropped to a 10-month low last month, official figures revealed on Thursday. According to the Commerce Department, home sales fell 10.4% to a seasonally adjusted annual pace of 536,000 units in December, whereas the November reading was revised up to 598,000 from the originally reported 592,000 unit-pace. Market analysts anticipated a slight decrease to 585,000 units during the reported period. The December figure marked the first monthly decline in the last three months. On an annual basis, sales were down 0.4% compare to December 2015. For all of 2016, new home sales grew 12.2% to 563,000 units, the highest level since 2007. Nevertheless, a severe lack of houses for sale continue to challenge the market. Earlier this week, the NAR said that the supply of preowned houses on the market fell to a 17-month low last month. Analysts say that the rise in mortgage rate is unlikely to have a major impact on the housing market. However, forecasts suggest further increases if the Federal Reserve keeps its promise to raise interest rates at least three times in 2017.

Separately, the Labor Department reported initial jobless claims rose to 259,000 in the week ending January 20, following the preceding week's 237,000 filings and surpassing analysts' expectations for an increase to 247,000.

'The near-term momentum in GDP likely will not compel the Monetary Policy Committee to abandon its view that the economy will slow this year as a result of the Brexit vote'. - Samuel Tombs, Pantheon Macroeconomics

The British economy ignored the widely expected post-Brexit vote slowdown once again in the three month period to December, maintaining the third quarter's growth pace. According to a preliminary GDP estimate released by the Office for National Statistics on Thursday, the UK economy expanded at a quarterly pace of 0.6% in the Q4, unchanged from the Q3. Meanwhile, market analysts anticipated a 0.5% growth rate. In a report, the ONS said economic growth was mainly boosted by services that offset weaknesses in the construction and industrial sectors. The majority of economists expected the British economy to face a severe slowdown after the June 23 referendum. However, the ONS reported the annual growth rate of GDP fell 2.0% in 2016 from 2.2% in the previous year. Moreover, this decrease was mainly due to weak growth registered in the Q1 of 2016. Nevertheless, the economic outlook for 2017 looks darker, as the post-Brexit impacts are likely to become more significant.

Furthermore, the weak Pound is expected to weigh on wages and consumer spending, which is the dominant source of economic growth in the UK. According to the latest forecasts released by the Bank of England, the economy is set to grow 1.4% in 2017. However, this forecast, like all economic forecasts, is subject to change.

S&P500 broke to a new all-time highs which has been expected to happen this week based on substructures of an Elliott Wave triangle. We have seen a nice push above 2272 wave D) swing high that confirmed end of a pattern, so ideally market is now underway up to 2320 after 2300 target has already been reached, but impulse up from 2251 still not finished.

EUR/USD

Current level - 1.0662

The recent break through 1.0710 confirms the reversal below 1.0780 and my outlook remains negative, for a slide towards 1.0580. Initial intraday resistance lies at 1.0710.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 115.24

My outlook here remains bullish, for a break through 115.65 hurdle, towards 116.70 area. Initial intraday support lies at 114.80, followed by 114.10.

GBP/USD

Current level - 1.2546

Yesterday's slide has confirmed a reversal at 1.2672 and my outlook is negative, for a sell-off towards 1.2415 area. Initial intraday resistance lies at 1.2608.

The pair continues to move lower after rally showed signals of stall but is still holding above key supports at 0.7493/89 (100 / 200 SMA’s).

Near-term studies turned bearish and keep the downside under pressure, as break below initial trigger at 0.7535 (daily Tenkan-sen) generated negative signal.

Daily indicators turned south and support negative scenario.

Firm break below 100/200SMA’s is needed for stronger bearish signal and extension towards next strong support at 0.7467 (top of thickening daily cloud).

The pair is on track for the first bearish weekly close after one month that would add on growing bearish pressure.

Res: 0.7542, 0.7550, 0.7583, 0.7607
Sup: 0.7489, 0.7467, 0.7437, 0.7397

The pair extends bounce from strong supports at 112.50 zone, where near-term base is forming.

Fresh bullish acceleration cracked first upper pivot at 115.13 (daily cloud top) and eyes next trigger at 115.55 (daily Kijun-sen line).

Immediate downside risk has been sidelined and near-term focus is turning higher.

Sustained break above the top of thickening daily cloud and Kijun-sen line (that also marks 50% of 118.59/112.50 pullback) is needed to confirm reversal and higher base at 112.50, for further retracement of 118.59/112.50 correction.

Failure to emerge above the cloud would signal recovery stall, however, risk is expected to remain shifted up while daily Tenkan-sen (114.05) holds.

Res: 115.13, 115.55, 116.30, 116.85
Sup: 113.37, 114.05, 113.60, 113.03

Yesterday's long red candle weighs on market, as fresh weakness after rejections at 1.0770 zone broke below daily Tenkan-sen support at1.0680 (now reverted to resistance).

Thursday's low at 1.0656 (also Fibo 61.8% of 1.0587/1.0773 upleg) is under pressure, as today's consolidation was capped at 1.0700 zone.

Scope is seen for extension towards next strong support at 1.0607 (Fibo 38.2% of 1.0339/1.0773) reinforced by 20SMA, with break here to accelerate towards 1.0560 (daily cloud base / Kijun-sen).

Initial resistances lay at 1.0680/1.0700, with extended upticks expected to stay under 1.0725.

Res: 1.0680, 1.0700, 1.0725, 1.0742
Sup: 1.0656, 1.0607, 1.0586, 1.0560