British data on Friday 13 December were pretty roundly disappointing: monthly GDP for October, industry and manufacturing all contracted against expectations for growth. Current estimates suggest that the Bank of England (‘the BoE’) will hold rates on 19 December and cut only three times in 2025, so it’s moderately likely that the BoE will remain at least one step higher than the Fed until next summer.
It’s possibly questionable whether 13 December’s reaction to the data was justified, since overall fundamentals for cable seem to be stronger than for euro-dollar. The volume of selling hasn’t increased significantly in recent days, so the price might need to bounce slightly before another serious attempt on $1.25 or lower.
The upside seems to be limited, though: $1.28 looks like an important resistance and the price is very close to overbought based on the slow stochastic. Volatility and volume will probably remain subdued until the central bank’s meetings, but from 18 December they’re likely to increase sharply. The next direction might become clearer then as the dust settles after banks’ news on consecutive day.
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Cable turns south after weaker British data
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