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The British Pound retraced the previous day’s decline against the greenback and crossed back above the 20-Day SMA (1.6619) to reach a high of 1.6729, and the currency may continue to appreciate going into the North American trade as the economic docket reinforces an improved outlook for the U.K. Taking a look at overnight price action shows the GBP/USD tipped lower following the upward revision in the third quarter GDP report however, the pound-dollar remains higher on the day following the rise in risk appetite.

The preliminary GDP report showed economic activity weakened 0.3% during the third quarter amid an initial forecast for a 0.4% contraction, while the annualized rate slipped 5.1% from the previous year versus the 5.2% decline seen in the advanced reading. The breakdown of the report showed private consumption held flat from the second quarter, which topped forecasts for a 0.2% drop, while business investments slipped 0.3% versus projections for a 3.3% decline, and conditions are likely to improve throughout the remainder of the year as the expansion in monetary and fiscal policy continues to support the real economy. However, as policy makers see a risk for a protracted recovery, market participants speculate the Bank of England to expand its asset purchase program over the coming months in an effort to stem the downside risks for growth and inflation, and expectations for further easing is likely to weigh on the interest rate outlook as the central bank maintains an “open mind” for future policy.

The Euro rallied against the U.S. dollar for the third day and rose to a fresh yearly high of 1.5097 during the overnight trade, and the single-currency may continue to retrace the sell-off from the previous year as market participants raise their appetite for risk. As trader sentiment improves, we could see the EUR/USD work its way above 1.5100 over the remainder of the week as U.S. traders go off-line in observance of the Thanksgiving holiday, and thin trading conditions could spark increased volatility in the euro-dollar as risk trends continue to drive price action in the foreign exchange market. Nevertheless, the economic calendar showed consumer confidence in Germany unexpectedly weakened for the second month in December as the GfK index slipped to 3.7 from 4.0 in the previous month, and the data foreshadows a weakened outlook for private spending as households face a weakening labor market paired with tightening credit conditions.

The greenback weakened across the board, with the USD/JPY tumbling to a low of 87.56, and the pair looks poised to test the yearly low at 87.15 as equity futures foreshadow a higher open for the U.S. market. Nevertheless, personal spending in the U.S. is expected to rise 0.5% in October after contracting 0.5% in the previous month, while personal incomes are projected to increase 0.1% during the same period after holding flat in September. Moreover, durable goods orders are forecasted to rise 0.5% in October after advancing 1.0% in the previous month, while new home sales are anticipated to increase 0.4% after contracting 3.6% in September, and the data is likely to encourage an improved outlook for future growth as the economy emerges from the worst recession since the Great Depression.