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GBPUSD Market Update

3/2/2023 10:47 AM

GBP/USD is trading with a downtrend, testing a psychological level of 1.2000 for a breakdown. Pressure on the position of the pound is exerted by the rather cautious comments of the Governor of the Bank of England, Andrew Bailey, regarding the strengthening of the "hawkish" course of the monetary policy of the regulator.

Against the backdrop of renewed inflation growth in the UK and Europe, as well as optimistic macroeconomic indicators, investors were counting on a continuation of the policy of active interest rate hikes. However, the head of the British regulator said that a final decision had not yet been made. Meanwhile, Consumer Credit in the UK rose from 0.786 billion pounds to 1.597 billion pounds in January, while analysts expected an increase to only 0.800 billion pounds, and the S&P Global/CIPS Manufacturing PMI in February corrected from 49.2 points to 49.3 points, which was slightly better than the neutral forecasts. Investors are now focusing on statistics from the US on the dynamics of jobless claims. In addition, during the day there will be a speech by the representative of the Bank of England Huw Pill.

European and British authorities have reached an agreement on the implementation of trade operations between the British province of Northern Ireland and Ireland, which is part of the EU. In particular, changes regarding customs control will be made to the so-called Northern Ireland Protocol, an addition to the Brexit agreement of 2020, allowing countries to trade without borders in the Irish Sea. Significant interruptions in the supply of goods, including medical supplies, were previously recorded, and different views of officials on the problem even led to a political crisis in Northern Ireland. According to Prime Minister Rishi Sunak, the document will be the beginning of a new chapter in relations between the UK and the EU.

Bollinger Bands in D1 chart demonstrate a weak decrease. The price range is narrowing, reflecting ambiguous dynamics of trading in the short term. MACD has returned to the decline and is currently preparing to form a new sell signal (the histogram tends to be below the signal line). Stochastic has also reversed to the downside after a short rise at the beginning of this week, indicating the risks of corrective decline in the nearest time intervals.

Resistance levels: 1.2084, 1.2150, 1.2240, 1.2311. | Support levels: 1.2000, 1.1900, 1.1800, 1.1700.

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