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The Pound Retreated to November Lows

3/8/2023 10:36 AM

The GBP/USD pair is trading with multidirectional dynamics, consolidating near 1.1810 and local lows from November 21. The reason for the sharp decline in the instrument was the results of the speech of the Chair of the US Federal Reserve, Jerome Powell, in the US Congress.

The official showed an unexpected "hawkish" rhetoric, pointing to the need to accelerate the increase in borrowing costs, and also stressed that it will remain at high levels for a long time to come. The tightening of the regulator's position led to a revision of plans for the interest rate already during the March meeting, which will be held at the end of the month. Now some analysts believe that the figure can be increased immediately by 50 basis points.

A similar rhetoric was previously made by the representative of the Bank of England Katherine Mann, who is known for her "hawkish" views. The official again called for more active actions in the field of monetary policy, pointing to the stabilization of the situation and the correction of energy prices, which significantly weakened the risks of a crisis in the UK. In addition, the calendar winter in the country has already ended, and natural gas consumption is gradually decreasing.

In turn, the February data on Retail Sales from the British Retail Consortium (BRC), presented the day before, recorded an acceleration of the indicator from 3.9% to 4.9% with a forecast of 4.8%, while the Halifax House Prices added 1.1% month-on-month instead of an expected decline of 0.3%, while the year-on-year figure remained at the same level of 2.1%. Experts believe that the upward dynamics may reflect the improvement in consumer confidence and the mortgage market. At the end of the week, the UK will publish updated dynamics of Gross Domestic Product (GDP), as well as provide statistics on Industrial Production. Analysts are expecting a GDP growth of 0.1% in January after declining by 0.5% in the previous month, while Industrial Production may fall by 0.2% after increasing by 0.3% in December.

Bollinger Bands in D1 chart demonstrate a moderate decrease. The price range is expanding actively; however, it fails to catch the surge of "bearish" sentiments at the moment. MACD is going down preserving a stable sell signal (located below the signal line). Stochastic is showing similar dynamics; however, the indicator line is already approaching its lows, indicating the risks of oversold pound in the ultra-short term.

Resistance levels: 1.1900, 1.2000, 1.2084, 1.2150. | Support levels: 1.1800, 1.1700, 1.1600, 1.1500.

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