The GBP/USD pair has been actively growing this week and is currently trading around 1.1770.
The US currency was under pressure against the background of the publication of October inflation data in the USA: on an annualized basis, the indicator decreased from 8.2% to 7.7% instead of the expected 8.0%, and the base value decreased from 6.6% to 6.3% instead of 6.5%, which, in turn, gives investors hope for a slowdown in interest rate growth the US Fed's interest rate or even its temporary suspension for the regulator's assessment of the consequences of the already committed tightening of monetary policy. Nevertheless, Mary Daly, President of the Federal Reserve Bank of San Francisco, Loretta Mester, head of the Federal Reserve Bank of Cleveland, and Esther George, chairman of the Kansas City FBI, noted that the latest inflation data are encouraging, but price growth remains too high and far from the target level of 2.0%.
On the other hand, the pound is receiving support against the background of data published today on the gross domestic product (GDP) of the UK: in Q3 the economy shrank by 0.2% instead of the expected 0.5%, and in the annual – grew by 2.4% instead of 2.1%. The September data on industrial production also exceeded the forecasts of experts: its volume increased by 0.2% on a monthly basis, instead of the expected fall by 0.2%, and decreased by 3.1% on an annual basis instead of 4.3%. In general, the UK economy continues to remain under pressure, although it is coping with it better than investors expected. Nevertheless, a quarterly decline in GDP could be the beginning of a protracted recession, which the Bank of England has long warned about. It should be noted that much in the movement of the GBP/USD pair will depend on the publication next week of the plans of the British budget policy. In the event that they contain serious tax increases and spending cuts, as is still expected, the pressure on households and demand will increase, which will entail new problems for the national economy and cause a weakening of the currency.
Technically, the price is trying to consolidate above 1.1718 (Murray [8/8]) in order to continue rising to the levels of 1.2020 (Fibo retracement 38.2%) and 1.2207 (Murray [+2/8]). The key for the "bears" is the middle line of the Bollinger Bands in the area of 1.1445, the breakdown of which will give the prospect of a decline to the area of 1.1230 (Murray [6/8]) and 1.0986 (Murray [5/8]).
Technical indicators point out the continuation of the upward trend: the Bollinger Bands and the Stochastic have reversed upwards, the MACD histogram is increasing in the positive zone.
Resistance levels: 1.1748, 1.2020, 1.2207. | Support levels: 1.1445, 1.1230, 1.0986.