Canadian loonie wins again, bagging a second straight week of gains despite flat GDP. US inflation cools, potentially paving the way for Fed cuts, boosting the loonie further. UK pound takes a breather on holiday with mixed economic signals. BoE likely sticking to “higher for longer” rates despite recession risk.

Canadian Charm:

• Loonie shines for two weeks in a row, climbing 0.83% this week and 2.2% in November and December.
• Flat GDP a downer, but retail sales surge offers hope.
• US inflation data eases, fueling speculation of rate cuts and pushing the loonie higher.

British Pound Pause:

• Pound treads water as UK banks take a holiday.
• Mixed economic picture: strong retail sales clash with weak GDP and revised downwards growth.
• Recession looms as Q2 GDP revised lower, adding pressure to the pound.
• BoE on hold for now, but weaker data might bring rate cuts in early 2024.

Technical Bits:

• USD/CAD: Tested support at 1.3262, resistance at 1.3262 and 1.3289.
• GBP/USD: Touched resistance at 1.2703, next up is 1.2732. Support at 1.2670 and 1.2641.

Key Takeaways:

• Canadian dollar on a roll, fueled by US inflation easing and potential Fed cuts.
• British pound in limbo as mixed data and BoE’s hawkish stance clash.
• Both currencies face technical hurdles and uncertainties in the new year.