UK Q4 GDP data disappoints but doesn't offer anything new to the picture
If you want a short summary, just don't go looking for the pound to take a nosedive. Much like the BOE last week, the disappointing data here is all tied to one thing: Brexit uncertainty.
In that lieu, the Q4 GDP report here offers nothing new to traders as it doesn't change anything moving forward. The economy is taking a prolonged hit as a result of the uncertain path that Brexit is taking and there's nothing more that traders can react upon other than that.
At the end of the day, it's still all about how Brexit progresses from here.
Cable is currently holding on through bids around the 1.2900 handle with further support then seen closer to 1.2880 (100-day MA @ 1.2888 also). I would expect those levels to hold on for now but be wary that the backdrop remains that sellers are in near-term control (price trades under both hourly moving averages) and that we're still nowhere near heading to any certain Brexit outcome.
As mentioned earlier, the impact of the latter will continue to weigh on the pound the longer this whole Brexit ordeal drags on. Hence, the disappointing Q4 GDP figures here could help spark further selling but don't expect that to be a quick jolt lower in the pound. If anything else, I can only see such a move being a slow and steady grind to the downside, until Brexit becomes more clear.
But baby steps. Right now, let's see if buyers can hold on to the 1.2900 handle. Risk to the upside remains the 100-hour MA (red line) @ 1.2947.
