The British pound was the weakest of the majors on Monday, with GBPUSD closing out the day in a consolidation above support at 1.6400. More critical support sits at 1.6300, though, where we have the potential neckline of a head-and shoulders patterns (shoulders at 1.6585). While there was no UK data on hand, the macroeconomic outlook for the nation remains bleak, especially after traders learned last week that the UK government posted a deficit of 8 billion pounds in July, the biggest since recordkeeping began in 1993, highlighting the dour state of the nation's finances. Standard & Poor's lowered its outlook on the UK's AAA credit rating to “negative” from “stable” in May for this very reason, and if we see this trend continue, the risk for an actual downgrade will grow and put greater pressure on the British pound.
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