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The Pound is Trying to Develop an Upward Momentum

11/15/2022 10:37 AM

The British pound is trading with mixed dynamics, holding close to 1.1760. The GBP/USD pair is trying to show a corrective decline, but the activity of the "bears" is still restrained, and investors are waiting for new drivers in the market. In particular, today statistics on the labor market for September-October will be published in the UK. Current forecasts suggest that the Claimant Count in October will decrease by 12.6 thousand after rising by 25.5 thousand in the previous month, while the Unemployment Rate will remain at the same level of 3.5%. Average Earnings Excluding Bonus in September may slightly adjust from 5.4% to 5.6%, while the indicator including bonus is expected to remain unchanged at 6.0%.

Tomorrow, investors will be watching inflation statistics, which will determine the subsequent course of the Bank of England in monetary policy. At the moment, markets expect further growth in the Consumer Price Index to 10.6% in annual terms and up to 1.7% in monthly terms. On Thursday, November 17, Chancellor of the Exchequer Jeremy Hunt will present the budget plan. The document is expected to include significant cuts in public spending while increasing the tax burden as the country grapples with a historic cost-of-living crisis caused by a decline in real incomes due to a sharp rise in energy and consumer goods prices as a result of the military conflict between Russia and Ukraine. Earlier, the official agreed with the published forecast of the Bank of England that the recession in the economy will last at least until 2024 and will be the longest on record, leading to an increase in Unemployment Rate to 6.5% over the next two years. Against this background, the regulator is more likely to continue tightening monetary policy, bringing the interest rate to 4.0%, if macroeconomic statistics confirm continued negative dynamics.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD grows, preserving a stable buy signal (located above the signal line). Stochastic, having approached its highs, is also trying to reverse into a descending plane, indicating the risks of overbought pound in the ultra-short term.

Resistance levels: 1.1800, 1.1853, 1.1933, 1.2000. | Support levels: 1.1700, 1.1600, 1.1459, 1.1300.

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