The pound is extending gains from just before the data releases earlier
Just before the UK data flurry earlier, cable was already inching higher from 1.2900 to 1.2925 but is trying to extend gains now after the data showed a better December month as post-election sentiment helped the UK economy escape a contraction in Q4 2019.
That said, the details are a bit murky with business investment on the quarter still largely sluggish (-1.0% q/q) while exports jumped strongly - mainly due to the December month, as election uncertainty faded perhaps.
That is seeing cable now run into a test of the 100-hour MA (red line) @ 1.2938 with the overnight high sitting nearby at 1.2946 as well.
For sellers, this is a key area to defend in order to maintain the near-term downside bias towards testing the 100-day moving average at 1.2908 once again.
But for buyers, a break above the levels above opens up the path towards potentially testing 1.3000 again from a technical perspective.
But fundamentally, the data earlier doesn't do much to give us much direction as it alludes to the switch in sentiment from the draggy October and November to the more upbeat December following the UK election results.
That has already carried over into the economic outlook this year but there is still the worrying part about inflation and post-Brexit trade uncertainty. Those are the more pressing issues for the pound rather than decent data releases from a while back.
