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GBPUSD Market Update

1/16/2023 1:41 PM

The growth of the GBP/USD pair stopped at the level of 1.2250 after the publication of mixed data on the UK's gross domestic product (GDP) last Friday.

Thus, in monthly terms in December, the indicator increased by 0.1%, which turned out to be better than the forecast of -0.3%, but worse than the previous value of 0.5%, and in annual terms it amounted to only 0.2%, which is lower than expected 0.3% and previous 1.5%. Nevertheless, experts believe that the situation in the country's economy remains negative, and a recession is inevitable, although it may come later than expected.

As you can see from the published statistics, in Q4 2022, the UK GDP corrected sharply due to higher electricity prices and high inflation, as a result of which many industries were forced to stop operations. This fact is confirmed by the statistics on production volumes in the manufacturing industry in monthly terms: in November, the indicator fell by 0.5%, which was lower than the forecast of -0.2% and the previous value of 0.7%.

Thus, the UK economy is experiencing difficulties that are unlikely to be resolved in a short time, and investors, fearing a recession in 2023, are in no hurry to open long positions in the British pound, preferring to wait for the publication of new economic data.

The long-term trend, however, remains upward. Last week, the GBP/USD pair approached the level of 1.2250, and today tested it. The mark cannot be broken out yet, which may lead to a correction in the mid-term, in the event of which the target for sales will be the low of January this year in the area of 1.1840.

The mid-term trend is upward. At the beginning of January 2023, market participants made an unsuccessful attempt to break down the key support 1.1998–1.1953, a local low was formed in the area of 1.1840, after which the price returned to the key trend support. The trend boundary is shifting to the 1.1840 area, while the price is trading above this level, it is profitable to consider long positions with a target in the 1.2471–1.2435 zone.

Resistance levels: 1.2250, 1.2450, 1.2650. | Support levels: 1.1840, 1.1540.

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