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The British Economy Remains Under Pressure

1/19/2023 12:36 PM

The GBP/USD pair shows neutral dynamics around the level of 1.2330.

The measures taken by the country's main financial regulator are not enough to fight inflation: the consumer price index has not dropped even by 1.0% over the entire period of monetary policy tightening, which causes serious concern among experts. In December, the indicator rose by 0.4%, maintaining the growth rate of November, which led to a slowdown to 10.5% YoY from 10.7% earlier. Thus, the situation in the UK economy is worse than in all other developed countries, and analysts predict a recession in the second quarter.

In the meantime, the US dollar is kept at lows in the USD Index, and the incoming macroeconomic information does not contribute to the recovery of the national currency. Thus, despite the celebration of Christmas, which usually causes a positive trend in retail sales, the indicator lost 1.1% in December after falling by 1.0% in November, which confirms the reduction in the purchasing power of the country's population, and now experts suggest a recession will occur within the next few months rather than quarters as previously estimated.

The daily chart shows that the trading instrument is moving within a local ascending corridor, preparing to break the previous year's high at 1.2440.

Technical indicators have turned to buy: the range of fluctuations of the EMA on the Alligator indicator is expanding upwards, and the histogram of the AO oscillator is forming rising bars above the transition level.

Resistance levels: 1.2440, 1.2800. | Support levels: 1.2180, 1.1840.

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