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The GBPUSD is Consolidating in Anticipation of the Fed's Decision

11/1/2022 11:26 AM

The pound shows an upward trend in trading, recovering from a moderate decline the day before. The GBP/USD pair is testing 1.1500 for a breakout, and investors are waiting for the US Federal Reserve's decision on the interest rate, assuming that at tomorrow's meeting it will again be adjusted by 75 basis points, while the regulator may indicate an easing of monetary policy in December. Forecasts, however, may not come true, given the situation with inflation in the US, as well as the number of "hawks" in the Federal Open Market Committee of the US Federal Reserve (FOMC).

Similar actions are expected from the Bank of England, which will hold a meeting on Thursday. It is assumed that the British financial authorities will also raise the interest rate by 75 basis points to 3.0%, after which they will slow down the "hawkish" rate due to high threats to the economy and, in particular, the possible onset of a recession as early as the fourth quarter. A change in trend, with sufficiently favorable forecasts, may begin only in 2024.

Meanwhile, new British Prime Minister Rishi Sunak is set to raise taxes to cover a 50.0 billion pounds public deficit following unprecedented borrowing during the coronavirus pandemic and the policies of his predecessor, Liz Truss, who initiated the household bailout program during the energy crisis. The plan will be presented on November 17.

UK macroeconomic statistics released yesterday also put pressure on the pound. Consumer Credit slowed in September from 1.215 billion pounds to 0.745 billion pounds, which was significantly worse than the projected 0.978 billion pounds. In turn, the number of Mortgage Approvals also decreased from 74.422 thousand to 66.789 thousand, while analysts expected a decrease to only 67.0 thousand.

Bollinger Bands in D1 chart show moderate growth. The price range is slightly narrowing, pointing to the appearance of flat dynamics of trading in the short term. MACD reversed towards declining, having formed a new sell signal (located below the signal line). Stochastic is rapidly descending, being located approximately in the center of its area.

Resistance levels: 1.1600, 1.1700, 1.1800, 1.1900. | Support levels: 1.1459, 1.1300, 1.1150, 1.1060.

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