Focus will start to shift back to consumers and Brexit
So, we've cleared the data points for the manufacturing PMI, construction PMI, and services PMI for the UK in December.
And the slightly better services PMI has lifted the sterling a little on the day - in fact the move came in the run up to the hour before the data was released.
Cable is touching session highs of 1.3549 right now, but there is facing a little resistance at current levels. When you look at the hourly chart, there's the 23.6 retracement level capping the pair.
Overnight, the downside move in the US session was limited by the 100-hour MA and 38.2 retracement level. That seems to be a level that buyers are hugging for the time being after the run up from the last week of December to a high of 1.3613 in Asian trading yesterday.
But with data points now out of the way, the focus will start to go back towards Brexit talks - and more often than not it has disappointed the GBP. Also, with inflation continuing to rise further, it's not helping consumers save up as household savings continue to dwindle - as disposable income isn't rising as quickly as inflationary pressures.
Those are two negative points that could come back and haunt the sterling. Cable has enjoyed a nice week of positivity riding on US dollar weakness and the lack of Brexit news, but there's always a worry of being too complacent.
As traders, our job isn't to reason why or where it's going to go - but to buy or sell based on where the prices are heading in our view. Right now, buyers are still in control as they held up on the hourly chart shown above - but if we've learnt anything from price action during Brexit talks last year is that rally sellers are always waiting to pounce at any given opportunity.
