The British Pound weakened for the second-day and slipped below the 200-Day SMA (1.6014) to reach a fresh monthly low of 1.5998, and the currency is likely to hold the broad range from earlier this year as investors weigh the outlook for future policy. The British Pound weakened for the second-day and slipped below the 200-Day SMA (1.6014) to reach a fresh monthly low of 1.5998, and the currency is likely to hold the broad range from earlier this year as investors weigh the outlook for future policy. As a result, we may see the GBP/USD face increased volatility following the Bank of England minutes due out on Wednesday at 9:30 GMT however, thin market conditions are likely to produce choppy price action throughout the major currencies as investors go off-line ahead of the Christmas Holiday. Meanwhile, the final 3Q GDP reading for the U.K. showed the economy contracted 0.2% from the second quarter amid an initial forecast for a 0.3% drop in the growth rate, while the annualized rate slipped 5.1% from the previous year after tumbling 5.8% during the three-months through June. The breakdown of the report showed household consumption increased 0.1%, with business investments surging 2.2% during the three-months through September, while government spending increased 0.3% after rising 0.7% in the second quarter. At the same time, the annual rate of private saving increased to 8.6% during the same period to mark the highest reading since the first quarter of 1998, and households may keep a lid on spending throughout the first-half of the following year as they continue to face a weakening labor market paired with tightening credit conditions. Moreover, the current account deficit unexpectedly widened to GBP 4.7B in the third quarter from a revised 4.4B during the previous three-month period, The Euro halted the five-day decline against the greenback and bounced back to reach a high of 1.4335 on Tuesday, and the single-currency looks to be carving out a near-term bottom this week as price action continues to hold above the 200-Day SMA at 1.4194. Nevertheless, as the pair remains oversold, with the RSI holding at 27, we may see the pair continue to retrace the decline from the previous week, but a break below the 200-Day is likely to expose the September low at 1.4177. Meanwhile, the economic docket showed consumer confidence in Germany unexpectedly weakened in January, with the GfK survey pulling back to 3.3 from a revised reading of 3.6 in the previous month, and conditions may get worse over the coming months as policy makers continue to see a risk for a protracted recovery in the euro-region. U.S. dollar price action was mixed overnight, with the USD/JPY rallying for the sixth day to reach a fresh monthly high of 91.49, and the reserve currency is likely to face increased volatility going into the North American trade as investors weigh the prospects for a sustainable recovery in the world’s largest economy. The final 3Q GDP reading is expected to show the growth rate expanding at an annual rate of 2.8% after contracting 0.7% in the second-quarter, while personal consumption is forecasted to increase 2.9% tumbling 0.9% during the three-months through June. In addition, existing home sales are projected to rise 2.5% in November after jumping 10.1% in the previous month, and the slew of data is likely to encourage an improved outlook for future growth as the economy emerges from the worst recession since the post-war period.

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