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GBPUSD Consolidation at Local Highs

11/9/2022 11:15 AM

The British pound is trading with multidirectional dynamics, consolidating near 1.1540. The previous three trading sessions were characterized by a rather active growth of the instrument, which was caused by a corrective sentiment in the US dollar due to growing fears about the easing of monetary policy by the US financial authorities.

At the moment, markets are counting on a US Fed rate hike of only 50 basis points in December, although the percentage is quite close to parity. The officials will rely on inflation statistics, which will be published tomorrow. Current forecasts suggest a slowdown in annual Consumer Price Index growth from 8.2% to 8.0%; however, the monthly rate could accelerate from 0.4% to 0.6%, and the Core CPI could correct from 0.6% to 0.5% in monthly terms and from 6.6% to 6.5% in annual terms.

On Friday, traders will follow the quarterly data on the dynamics of Gross Domestic Product (GDP) and Industrial Production statistics for September. Analysts expect GDP to fall by 0.5% after rising by 0.2% in the previous period. In turn, representatives of the Bank of England said that the economy had already entered a recession, which could last until 2024. Officials predict a 0.75% slowdown in the economy in the second half of this year, which, in turn, will become a catalyst for an even greater decline in real incomes of the population against the backdrop of continued growth in the cost of energy and consumer goods, as well as an unprecedented inflation of 10.1% in September. The regulator believes that price growth will reach a 40-year high, about 11.0%, in the current quarter, therefore, the "hawkish" monetary policy will continue.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD indicator is growing preserving a moderate buy signal (located above the signal line). Stochastic shows its upward direction but is rapidly approaching its highs, which reflects the risks of overbought pound in the ultra-short term.

Resistance levels: 1.1600, 1.1700, 1.1800, 1.1933. | Support levels: 1.1459, 1.1300, 1.1150, 1.1060.

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