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The Pound is Developing Flat Dynamics

11/23/2022 11:27 AM

The British pound is trading with mixed dynamics, holding close to 1.1875. The day before, the GBP/USD pair showed a moderate corrective growth, having won back Monday's losses; however, the activity in the market is still quite low. Investors are in no hurry to open new positions in anticipation of the publication of the minutes of the meeting of the US Federal Reserve. In addition, US stock exchanges will be closed tomorrow for Thanksgiving.

The pressure on the dollar is exerted by expectations that the US Federal Reserve will go for some easing of its "hawkish" monetary policy. Traders are counting on the continuation of the interest rate hike cycle, but its pace is likely to be reduced. In particular, in December the rate is expected to be corrected by only 50 basis points.

Today, investors are focused on macroeconomic statistics from the US on the dynamics of Durable Goods Orders for October. Current forecasts suggest that the figure will rise by 0.4%, repeating the dynamics of the previous month, and Excluding the Defense sector, order volumes may decrease by 0.1% after rising by 1.5% in September. The UK is due to publish business activity statistics during the day: the S&P Global/CIPS Composite PMI is expected to fall from 48.2 points to 47.5 points in November, and the Services PMI may fall from 48.8 points to 48.0 points.

In the meantime, the Organization for Economic Co-operation and Development (OECD) believes that in 2023 the UK will take second place after Russia in terms of the slowdown in macroeconomic growth among developed countries against the background of the energy crisis, which has become a driver of unprecedented inflation. According to experts' forecasts, the national economy will grow by 4.4% this year, but shrink by 0.4% next year, while the global economy, in turn, will add 3.1%, but will adjust to 2.7% in 2024. Downside risks remain, the report notes, as growth momentum has been lost and financial conditions have deteriorated significantly as global central banks have tightened monetary stimulus in recent months.

Bollinger Bands on the daily chart show a steady increase. The price range is narrowing, reflecting appearance of multi-directional dynamics in the short term. MACD is slightly declining keeping a weak sell signal (located below the signal line). Stochastic reversed horizontally approximately at the center of its area, fixing an approximate balance of power in the ultra-short term.

Resistance levels: 1.1933, 1.2027, 1.2133, 1.2236. | Support levels: 1.1853, 1.1800, 1.1700, 1.1600.

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