24.12.202109:16 Forex Analysis & Reviews: Pound sterling reached the high and the small pullback was not critical

The British currency has confidently moved to the next peaks by the end of this week and successfully reached its high. A slight decline did not prevent it from enjoying the victory, which is not the last in the list of this currency.

Yesterday, it managed to rise to a one-month high against the US dollar amid improved risk appetite as concerns about the Omicron coronavirus strain eased. On this wave, the British currency reached the psychologically significant level of 1.3400 and further moved up. Such growth was recorded for the first time since November 23 of this year in view of the US dollar's temporary collapse. According to MUFG Bank analysts, the increased risk appetite negatively affected the American currency and gave a head start to the British one. However, they believe that the prospects for raising interest rates in the United States in 2022 will significantly support the USD.

The pound tried to rise previously, especially before the meeting of the Bank of England. Short bursts of growth did not make significant changes in the dynamics of the pound. However, the situation has now stabilized. On Friday morning, the GBP/USD pair was around the level of 1.3404, but could not hold its gained positions and remained in the range of 1.3392-1.3393.

Analysts said that the pound has risen to the upper border of the wide range, wherein it has been since this month started. Many experts believe that the current dynamics of this currency are caused by technical rather than macroeconomic factors. Analysts pay attention to the overbought GBP, the fact of which is putting pressure on buyers. The current situation forms the so-called "swing" between sellers and buyers. This contributes to the transition of the GBP/USD pair into a downward spiral, where the nearest target is the level of 1.3290.

Meanwhile, the UK's macroeconomic data did not affect the dynamics of the pound very much. Some of them, particularly the rates of economic growth, were revised upward (from the previous 23.6% to the current 24.2%). UK GDP data for the third quarter of 2021 turned out to be slightly worse than forecasted, but quite acceptable – economic growth slowed down by 6.8%. A relatively calm economic environment favorably influenced the dynamics of the pound. According to analysts, the closest prospects for the pound look positive. Based on January 2022 forecast, the British currency may rise.