By DailyFX – GBPUSD – To Cut Or Not To Cut.Against the U.S. currency, the British pound made a concerted effort to climb higher earlier… … on in light of confirmed strength by the world's largest economy.

According to the Commerce Department, U.S. gross
domestic product rose better than expected in addition to higher
consumer spending figures and manufacturing activity. All dollar
bullish, optimism derived from the data quickly fell to the wayside as
comments by the newest Monetary Policy Committee member David Walton
stated to the Times that inflationary pressures could indeed remain in
the region as growth potentially recovers. With consumers adjusting to
inflationary pressure, mostly attributed to higher energy prices,
spending could indeed tick up as housing valuations have steadied from
previous declines. In this situation, Bank of England policy makers may
not be so ready to adjust rates either to the down or upside.
Nonetheless, today's GfK consumer survey results still paint a clouded
picture as sentiment remains at a negative 8 reading, a two and a half
year low for the survey.

Technically Speaking
Bouncing off of 1.7161 (61.8 percent fib from the interday move),
sparked by a morning star formation, the pound sterling has made a
considerable climb higher through subsequent fib levels to hit the
session high just below the 1.7350 ceiling. Slightly retraced going
into Asia, consolidation looks to form with further upside potential
present. A breach above the 7350 figure would lead to a climb higher
with a failure forming a textbook double top. Subsequently, floors
would hold at previous levels with the first signs of capping at
1.7111.

GBPJPY

Weaker Earnings, Thin Spending
Notions of a narrowed rate cut scenario helped the sterling higher
against the crosses as well in the session. Tossing aside the worse
than expected consumer sentiment survey, traders highlighted rather
negative data from the world's second largest economy. According to
preliminary report, for the month of October, labor cash earnings
dropped from the previous 0.8 rise. Increasing only 0.5 percent, the
figure is considerably lower than earlier estimates of 0.7 percent and
sparks some concern over the viability of current consumer demand.
Although experts believe that exports may remain strong to underpin the
economy for a 2.4 percent showing by year end, consumer weakness may
actually take away when all is said and done. Subsequently, overtime
earnings dipped 0.1 percent compared to a 0.4 percent rise in the
previous month. Comparatively balancing, construction orders remained
concrete, rising 0.6 percent.

Technically Speaking
Spiking through consolidation at 205.50 (50 percent fib from the weekly
move), the underlying cross looks to have run out of steam. Sharply
producing a doji candle, the nascent formation of an evening star lends
to potential near term downside for the cross as trader pare back gains
from the enormous move. As a result, the first floor on the way down
would be at 206.58 (23.6 percent fib) and 205.99 (38.2 percent fib).
Although upside potential is a possibility, bulls' momentum may be
short lived just below the 208 previously tested ceiling.

GBPCHF

Narrowing Rate Expectations
Another cross subject to the rise in the pound leg, the GBPCHF currency
pair moved higher as traders additionally sold the Swissie on waning
anticipation of previously expected monetary tightening come December.
Earlier in the month, SNB Chairman Roth suggested at finally lifting the
national interest rate of 0.75 percent to compensate for rising growth
in the nation and inflationary pressures. Economists and market
participants alike estimated that 50 basis points were not a foregone
reality for the year's last meeting in November. However, with
today's consumer prices figures below expectations, sentiment has
now been tempered a notch with traders now expecting nothing more than a
25 basis point hike. Consumer prices declined in the month of November
after jumping0.9 percent in the previous month. Economists had
anticipated a much smaller dip by 0.2 percent.

Technically Speaking
Already retraced back to 2.2725 (23.6 percent fib level from the
intraday move), further upside looks to be in the cards for the GBPCHF
pair. Gaining momentum off of the longer term double bottom, retests of
the session high look probable with the first floor considerably lower
at 2.2683.

By DailyFX