GBP/USD: political uncertainty weighs on the pound
Current trend
This week, the GBP/USD pair corrected down to 1.3570, but today it is trying to restore lost positions. In general, the British currency is influenced by a number of opposite factors.
The December data on inflation in the United Kingdom published today confirmed its further growth: the consumer price index rose from 5.1% to 5.4%, reaching its highest since 1992. The negative dynamics due to the increase in the cost of energy carriers should prompt the Bank of England to raise the interest rate again in early February, which, in turn, will serve as a catalyst for strengthening the pound. In addition, the UK has signs of a gradual exit from the coronavirus pandemic caused by the Omicron strain. The incidence in the country is gradually decreasing, which allows officials to announce the mitigation of existing quarantine measures as early as next week.
On the other hand, the growth of quotations is hindered by the problems of the national labor market and the intensifying political crisis, which now occupy significant attention of investors. According to November data, wage growth in the UK is slowing down and is seriously not keeping up with the increase in inflation, which may negatively affect consumption and the state of the economy as a whole. Meanwhile, investors are following the development of the situation in the country's parliament: Boris Johnson is getting closer to losing the post of prime minister due to the scandal caused by his presence at the event, while strict coronavirus restrictions were in effect on the territory of the United Kingdom. Members of the Conservative Party have already begun collecting parliamentary requests to begin the procedure for removing a politician from office.
Under these conditions, the US currency looks more stable and attractive for investment, as the market expects a cycle of interest rate hikes by the US Fed, the first of which may take place as early as March.
Support and resistance
The price of the GBP/USD pair has returned to the framework of the descending channel and is close to 1.3549 (Murray [7/8], middle line of Bollinger Bands). Its breakdown will give the prospect of further decline to the area of 1.3427 (Murray [6/8]). In case of a breakout of the level of 1.3672 (Murray [8/8]), the upward dynamics of the trading instrument will be able to continue to 1.3740 (January highs) and 1.3795 (Murray [+1/8]). The indicators do not give a single signal, confirming the uncertainty of the market: the Bollinger Bands are directed up, the Stochastic is directed down, while the MACD histogram is decreasing in the positive zone.
Resistance levels: 1.3672, 1.3740, 1.3795.
Support levels: 1.3549, 1.3427, 1.3305.
This week, the GBP/USD pair corrected down to 1.3570, but today it is trying to restore lost positions. In general, the British currency is influenced by a number of opposite factors.
The December data on inflation in the United Kingdom published today confirmed its further growth: the consumer price index rose from 5.1% to 5.4%, reaching its highest since 1992. The negative dynamics due to the increase in the cost of energy carriers should prompt the Bank of England to raise the interest rate again in early February, which, in turn, will serve as a catalyst for strengthening the pound. In addition, the UK has signs of a gradual exit from the coronavirus pandemic caused by the Omicron strain. The incidence in the country is gradually decreasing, which allows officials to announce the mitigation of existing quarantine measures as early as next week.
On the other hand, the growth of quotations is hindered by the problems of the national labor market and the intensifying political crisis, which now occupy significant attention of investors. According to November data, wage growth in the UK is slowing down and is seriously not keeping up with the increase in inflation, which may negatively affect consumption and the state of the economy as a whole. Meanwhile, investors are following the development of the situation in the country's parliament: Boris Johnson is getting closer to losing the post of prime minister due to the scandal caused by his presence at the event, while strict coronavirus restrictions were in effect on the territory of the United Kingdom. Members of the Conservative Party have already begun collecting parliamentary requests to begin the procedure for removing a politician from office.
Under these conditions, the US currency looks more stable and attractive for investment, as the market expects a cycle of interest rate hikes by the US Fed, the first of which may take place as early as March.
Support and resistance
The price of the GBP/USD pair has returned to the framework of the descending channel and is close to 1.3549 (Murray [7/8], middle line of Bollinger Bands). Its breakdown will give the prospect of further decline to the area of 1.3427 (Murray [6/8]). In case of a breakout of the level of 1.3672 (Murray [8/8]), the upward dynamics of the trading instrument will be able to continue to 1.3740 (January highs) and 1.3795 (Murray [+1/8]). The indicators do not give a single signal, confirming the uncertainty of the market: the Bollinger Bands are directed up, the Stochastic is directed down, while the MACD histogram is decreasing in the positive zone.
Resistance levels: 1.3672, 1.3740, 1.3795.
Support levels: 1.3549, 1.3427, 1.3305.
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