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GBPUSD Market Analysis

3/23/2023 2:04 PM

The GBP/USD pair is testing 1.2329 (Murrey level [5/8]). The pound is supported by the easing of the rhetoric of the US Federal Reserve and the release of the February data from the UK, which recorded an acceleration in the growth of consumer prices.

At yesterday's meeting, the US regulator decided to raise the interest rate by 25.0 basis points and allowed the suspension of the monetary policy tightening cycle soon. The accompanying statement indicated that the US Federal Reserve's Open Market Committee would closely monitor incoming macroeconomic information and evaluate the effect of the measures already taken. The agency suggests that some additional intensification of the "hawkish" rhetoric may be appropriate to return inflation to 2.0%. Earlier, similar documents contained different wording and noted that a "permanent increase" in rates was appropriate, which was interpreted by the market as "dovish" position of the regulator. Speaking to reporters, the head of the department, Jerome Powell, confirmed that officials did discuss these measures but decided not to implement them yet due to high inflation and a strong labor market. The possibility of moving to a more cautious monetary policy puts pressure on the US currency and supports alternative assets.

The Bank of England may return to a significant increase in interest rates, as inflationary pressures in the country began to rise again: in February the consumer price index rose from 10.1% to 10.4% YoY, and the core index – from 5.8% to 6.2%. Under these conditions, the regulator may abandon its intention to suspend the tightening of monetary policy since the increase in inflation remains the primary problem for the UK economy.

The key "bullish" level is 1.2329 (Murrey level [5/8]), consolidation above which will give the prospect of further growth to 1.2451 (Murrey level [6/8], Fibonacci correction 50.0%) and 1.2573 (Murrey level [ 7/8]).

Technical indicators signal that the uptrend is continuing: Bollinger bands are reversing upwards, while the MACD histogram is increasing in the positive zone. Stochastic reversal down in the overbought zone does not rule out a correction to the area of 1.2207 (Murrey level [4/8]) or 1.2085 (Murrey level [3/8]) but it is unlikely to change the trend.

Resistance levels: 1.2329, 1.2451, 1.2573. | Support levels: 1.2207, 1.2085.

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