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GBPUSD Market Update
2/7/2023 10:37 AMThe GBP/USD pair is trading with a weak upward trend, testing 1.2035 for a breakout. In addition, the instrument is still close to its local lows from January 6. The pound managed to avoid the active development of the "bearish" trend the day before against the backdrop of relatively neutral macroeconomic statistics from the US, as well as the rhetoric of the member of the Bank of England Catherine Mann, who advocated further tightening of monetary policy.
Mann, who is traditionally considered one of the main "hawks" in the British regulator, noted that the risks of not raising the interest rate sufficiently today prevail over the risks of its excessive increase, as inflation in the country is well above the target level of 2.0%. In addition, economists polled by Reuters predict a 0.3% contraction in the UK's Gross Domestic Product (GDP) between November and December 2022, with stagnation expected in the fourth quarter. If output declines over this period, the UK economy will enter a technical recession, which the Bank of England predicts will last until the first quarter of 2024, but is likely to be shallow on the back of a correction in wholesale gas prices and the strength of the labor market.
In turn, some pressure on the position of the pound was exerted by macroeconomic statistics from the UK. S&P Global Construction PMI in January corrected from 48.8 points to 48.4 points, while analysts had expected 49.5 points. Today's data may lead to the development of "bullish" dynamics for the instrument: British Retail Consortium (BRC) Like-For-Like Retail Sales in January rose by 3.9% after rising by 6.5% in the previous month, while analysts expected -1.4%.
On the D1 chart Bollinger Bands are reversing into the descending plane. The price range is actively expanding but it fails to conform to the surge of "bearish" activity at the moment. MACD is going down preserving a stable sell signal (located below the signal line). In addition, the indicator is trying to consolidate below the zero level. Stochastic, having reached its lows, reversed into the horizontal plane, indicating risks of oversold pound in the ultra-short term.
Resistance levels: 1.2084, 1.2150, 1.2240, 1.2311. | Support levels: 1.2000, 1.1900, 1.1800, 1.1700.
