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The British Currency Continues to Trade in Correction

1/5/2023 1:18 PM

During the Asian session, the GBP/USD pair trades in different directions, consolidating near the 1.2035 mark. Yesterday, the pound was correcting, as a result of which the "bulls" were able to win back all losses on Tuesday.

Yesterday, local support for the currency was provided by data on business activity: the indicator in the manufacturing sector from S&P Global/CIPS in December corrected from 44.7 points to 45.3 points, which was better than analysts' neutral forecasts, and today at 11:30 (GMT+2) investors expect the publication of the December composite index, which may rise from 48.2 points to 49.0 points, and the value in the services sector, which will rise from 48.8 points to 50.0 points. If expectations are justified, the pound will strengthen. Otherwise, the breakdown of the level of 1.1900 may follow.

Traders are focused on yesterday's speech by British Prime Minister Rishi Sunak, who promised to halve inflation by the end of 2023, ensure economic growth and reduce the country's public debt. Thus, the Bank of England should continue tightening monetary policy and raise the rate at a pace no lower than last year, which will support the national currency, raising it to the maximum of December 2022, around 1.2405.

The long-term trend is upwards. After reaching 1.2405, the price started a correction, within which a strong support level of 1.1900 was reached, from which new purchases can be considered with the target at 1.2405.

The medium-term trend is upwards. At the end of December, the trading instrument reached the key trend support around 1.1998–1.1953: it was held. Therefore, new long positions can be considered from this area with the target in zone 6 (1.2471–1.2435).

Resistance levels: 1.2405, 1.2655. | Support levels: 1.1900, 1.1640.

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