Daily December British Pound Pattern, Price & Time Chart
The December British Pound is trading slightly higher this morning after a report showed U.K. factory output prices were unchanged in October. The cost of goods sold at U.K. factories grew at its slowest annual pace since May as the annual rate of manufacturing inflation eased to 5.7 percent from 6.3 percent in September. The news helped to ease fears of runaway inflation. This may not necessarily be a good thing because a drop in inflation may be a sign of a slumping economy.
On the Thursday, the Bank of England left interest rates unchanged at historically low levels. It also maintained the same level of quantitative easing established last month. Traders may begin to pressure the British Pound on the notion that the central bank may have to inject additional stimulus into the economy over the near-term. Upcoming data may show that inflation has fallen well below the target over the medium term. On Wednesday, November 16, the BoE will release its quarterly Inflation Report.
Technically, the December British Pound is in an up trend on the daily chart, but coming dangerously close to turning the main trend down. A move through the swing bottom at 1.5867 will change the trend to down. This would set up a break into an uptrending Gann angle at 1.5699. Based on the main range of 1.5179 to 1.6158, the retracement zone at 1.5669 to 1.5553 is also a potential downside target. A support cluster has formed at 1.5699 to 1.5669, but this price zone is unlikely to be reached today.
