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GBPUSD Market Update

12/22/2022 12:19 PM

Due to the US dollar stagnation, the GBP/USD pair is correcting at 1.2126.

The pound is falling against the backdrop of the largest mass protests of civil servants in the last 30 years, caused by dissatisfaction with working conditions and wages: yesterday, ambulance workers stopped working in almost all medical districts of the British National Health System (NHS). The situation is complicated by high inflation, as a result of which bills for electricity and heating have increased several times. Also, the public sector's net cash requirement rose to 20.336B pounds in November from 9.997B pounds last month, marking the fourth straight month of growth, while borrowing rose to 21.2B pounds from 13.37B pounds previously. According to a report from the UK's Office for Budget Responsibility (OBR), the total has already exceeded 105.0B pounds since January and could reach 177.0B pounds or 7.0% of gross domestic product (GDP) by the end of the fiscal year.

The decline in the GBP/USD pair is constrained by the negative dynamics of the US dollar, which is currently trading around 103.500 in the USD Index against the backdrop of a disappointing report on the real estate market: in November, sales on the secondary housing market fell by 7.7% to 4.09M against 4.43M a month earlier, marking the tenth consecutive month of decline.

On the daily chart, the trading instrument is moving within the local ascending channel, falling toward the support line.

Technical indicators keep a buy signal but point to a possible decline: the EMA fluctuation range on the Alligator indicator began to narrow rapidly, and the AO oscillator histogram forms downward bars, falling in the buy zone.

Resistance levels: 1.2230, 1.2451. | Support levels: 1.2050, 1.1680.

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