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The Pound is Testing 1.20 for a Breakout

11/29/2022 11:24 AM

The British pound is trading with an upward trend, testing the level of 1.2000 for a breakout again. The day before, the GBP/USD pair showed a rather noticeable decline, which did not allow the "bulls" to develop the momentum of the last week and consolidate on new local highs. The US dollar was supported by the comments of the US Fed representative James Bullard, who spoke in favor of maintaining a high level of interest rates for a longer period of time. The official stressed that an aggressive increase in the rate should not be completely ruled out in 2023, and the cost of borrowing could remain high for the next two years.

In turn, pressure on the pound is exerted by the pessimistic outlook for the British economy. In particular, at the beginning of the week it became known that the quarterly growth in Housing Prices in the country fell to the lowest levels since January-February 2020, reflecting the development of negative dynamics in the real estate market. A growing number of families are turning away from buying new homes due to falling incomes, rising living costs and deteriorating credit conditions, as well as the evolving energy crisis. The day before it became known that next spring the government will allocate 1.0 billion pounds for a program to improve the thermal insulation and energy efficiency of houses.

Today, investors are waiting for the publication of statistics from the UK on the dynamics of Consumer Credit. Current forecasts suggest a modest rise from 0.745 billion pounds to 0.850 billion pounds, with total mortgage approvals likely to fall from 66.789 thousand to 60.200 thousand.

Bollinger Bands in D1 chart show moderate growth. The price range is narrowing, pointing at the multidirectional nature of trading in the short term. MACD is going down preserving a slight sell signal (being located below the signal line). Stochastic shows similar dynamics, rapidly retreating from its highs, which signal that the pound may be overbought in the near future.

Resistance levels: 1.2027, 1.2152, 1.2236, 1.2400. | Support levels: 1.1939, 1.1853, 1.1800, 1.1700.

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