Solid News

UK Economy Remains Under Serious Pressure

1/4/2023 11:55 AM

The pound is trading in different directions, trying to recover from the active decline the day before. At the moment, the GBP/USD pair is holding near the local lows of November 23, making new attempts to test the resistance level of 1.2000 for a breakout.

There are no noticeable drivers for the growth of the US currency at the beginning of the week, and the increase in demand is largely due to speculative sentiment regarding further tightening of monetary policy by the US Federal Reserve. In turn, the pound was supported by data on business activity in the UK, presented the day before. S&P Global/CIPS Manufacturing PMI in December corrected from 44.7 points to 45.3 points, which turned out to be better than analysts' neutral forecasts.

At the same time, the UK economy is facing unprecedented domestic challenges, including high inflation, a cost of living crisis, as well as a record influx of migrants (45.756 thousand people crossed the English Channel last year) and growing dissatisfaction with working conditions among public sector workers. In particular, the British Railway, Maritime and Transport Union (RMT) reports that about 40.0 thousand railway employees are already participating in the five-day action, which is taking place this week, demanding wage increases and the cancellation of management decisions to reduce staff. For this reason, about 62.0 thousand trains may be canceled, which will make it much more difficult for the British to travel around the country after the Christmas holidays. In his New Year's address, Prime Minister Rishi Sunak said his government will put the needs of the population first this year and will make every effort to resolve the crisis.

As representatives of the Bank of England have repeatedly noted, the UK economy is facing a recession in 2023, which may turn out to be worse than in other G7 countries. The situation is complicated by a possible political crisis, since after the unsuccessful premiership of Liz Truss, discontent remains in society and the level of skepticism towards the new government is growing. The recovery of the UK economy is also accompanied by the adoption of a number of highly unpopular measures in the form of an increase in the fiscal burden on households.

On the daily chart, Bollinger Bands are declining rather actively: the price range is narrowing from above, reflecting the emergence of multidirectional trading dynamics in the nearest time intervals. MACD is below the signal line, at the moment the indicator is testing the zero level for a breakdown. Stochastic, having interrupted its active growth, formed last week, is reversing into a downward plane, signaling in favor of a further decline in the instrument in the ultra-short term.

Resistance levels: 1.2027, 1.2084, 1.2150, 1.2240. | Support levels: 1.1900, 1.1800, 1.1700, 1.1600.

Find Us
Registered Address : Bonovo Road – Fomboni Island of Mohéli – Comoros Union
Sofia, PO Box 1407,14 Flip Kutev Str. Floor 2, Industrial area Hladilnika, Bulgaria
Call Us
+35 924 928 392

Disclaimer 1: Solid ECN Securities LLC and it affiliates does not accept clients from Turkey, United States, and Europe.
Disclaimer 2: The information provided on this site is not intended for residents of any country or jurisdiction where its distribution or use would violate local laws or regulations.
Risk Warnings
Solid ECN Securities LLC offers trading on Foreign Exchange (‘Forex’ or ‘FX’) and Contracts for Difference (‘CFDs’), which are complex financial products that are traded on margin. They carry a high level of risk since leverage can work both to your advantage and disadvantage. As a result, these products may not be suitable for all investors, as loss of all invested capital may occur. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved and consider your investment objectives and level of experience. Seek independent advice, if necessary.
Solid ECN Securities LLC does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of a CFD. Solid ECN Securities LLC is not a financial advisor and all services are provided on an execution-only basis. This communication is not an offer or solicitation to enter into a transaction and shall not be construed as such.
This website is not directed at any jurisdiction and is not intended for any use that would be contrary to local law or regulation.
By using you agree to use our cookies to enhance your experience.
Solid ECN Securities LLC is authorized and regulated by the Comoros Union with reference number HY00623411.
Copyright All Right Reserved 2023