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The Pound Retreats from Local Highs

2/1/2023 11:57 AM

The GBP/USD pair is trading in different directions, keeping close to 1.2300 and the local lows of January 25, updated the day before. Market activity remains quite low, as investors are in no hurry to open new positions ahead of the publication of the results of the two-day meeting of the US Federal Reserve.

Analysts' forecasts suggest that the US regulator will increase the interest rate by only 25 basis points after increasing by 50 basis points at the last meeting. The most important will be the accompanying statements by the Chair of the Fed, Jerome Powell, who may take a fairly tough stance on monetary policy. The official is expected to repeat the words that the cost of borrowing will remain at high levels for quite a long time.

Tomorrow, investors will evaluate the publication of the results of the meeting of the Bank of England, forecasts for which suggest a 50 basis point increase in interest rates, but it is expected that the decision will not be taken unanimously. The UK economy is in a much more vulnerable position than the US economy, so the regulator needs to pay attention to evidence of a recession.

The macroeconomic statistics released the day before in the UK had moderate pressure on the positions of the pound: consumer loans rose by 0.493 billion pounds, well below the forecast of 1.050 billion pounds, mortgages by 3.24 billion pounds instead of 4.00 billion pounds, and personal lending is estimated at 3.7 billion pounds instead of 5.1 billion pounds, indicating the decrease in activity in the national economy.

In the D1 chart, Bollinger Bands are reversing horizontally. The price range is narrowing, reflecting the emergence of ambiguous dynamics of trading in the short term. MACD is falling, keeping a relatively strong sell signal (the histogram is below the signal line). Stochastic shows a more confident decline, but at the moment it is rapidly approaching its lows, indicating risks of the British currency being oversold in the near future.

Resistance levels: 1.2400, 1.2500, 1.2600, 1.2700. | Support levels: 1.2311, 1.2240, 1.2150, 1.2084.

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