Global macro overview for 27/10/2016:

The preliminary GDP data for Q3 from the United Kingdom has been released today and they have beat market expectations. The UK flash GDP showed 0.5% expansion, better than market expectations of 0.3%, but still lower than last month number of 0.7%. Moreover, on the year-to-year basis the flash GDP increased to 2.3% from 2.1% last month. The direct quote from the Office for National Statistics might help to explain what is behind the numbers: "In Quarter 3 2016, the services industries increased by 0.8%. In contrast, output decreased in the other 3 main industrial groups with construction decreasing by 1.4%, agriculture decreasing by 0.7% and production decreasing by 0.4%, within which manufacturing decreased by 1.0%". The immediate comments from UK financial minister Phillip Hammond have hit the mass media. He said that Q3 GDP data shows the economy is resilient as the fundamentals of the UK economy are strong. Moreover, he said the UK will need to adjust to a new relationship with the EU, but it is well placed to deal with the challenges. In conclusion, not such a good reading as a month ago, but better than market expectations will make the temporary rally in the pound across the board.

Let's now take a look at the GBP/USD technical picture in the daily time frame. The initial spike above the intraday resistance at the level of 1.2252 is now fading as the longer time frame trend is still bearish. Moreover, any breakout below the technical support at the level of 1.2206 will indicate a possible sell-off towards the next support at the level of 1,2134.