Whether GBP is in overbought territory?

Euro-Zone's Q3 GDP result the main data release of the week..

GBP

'Momentum' is the key word surrounding the Pound at the moment and it has been a hugely surprising performance of late for what is known as an 'emerging currency'. 'Dumbfounded' would also be a term used to describe the currency at this point in time after a surging November.

Just 2-weeks ago, GBP v EUR hit a 7-month low. 1-week before that, the pair first hit a 7-month low and during this period, the writing was certainly on the wall for most, that Sterling was about to fall and fall potentially dramatically. Now we are seeing a 3-month high at the time of writing.

2-months ago, GBP v USD hit a 6-month low. Trading levels remained on the downside for 6-weeks. That was until 2-weeks ago, when fortunes for the pair completely changed. 3% has been claimed in that time-frame, which no-one foresaw and no traders & investors are scratching their heads as to what happens next.

With no major economic action available this week, we may see a 'dead-rubber' trading week, where there is no market volatility. Or, we may see £ momentum continue. Or, we may be in overbought territory and £ is about to drop like a stone. We will be sitting this one out like the majority of forecasters..

EUR
The Euro has witnessed the strongest short-term push against it from Sterling in 15-months. The divergence in when central banks will start cutting interest rates is almost the sole reason for the mini-collapse in recent weeks versus the Pound. But December tends to be a strong month for the single currency and could see the new losses reversed. 14 out of the last 20-years has seen the Euro gain in value against the majors, so let's see what happens this time round..

USD
The Dollar didn't perform as bad as many had expected last week, but is still under pressure. December is a new month though and the majority of data-houses will hope this is the month that forecasts get back on track with the majority we follow not changing stance near and long term since a decline in value hit 2-weeks ago. Services PMI and jobs data could prove useful for the $ this week..