02.01.202012:53 Forex Analysis & Reviews: Pound: faces difficulty in rising

The beginning of the new year and the new trading session did not bring optimism on the dynamics of the British currency. Pound is still at the mercy of conflicting drivers that are slowing its upward movement.

At the end of 2019, experts recorded uneven dynamics of pound. On Monday, December 30, it went up sharply, and the GBP/USD pair rose to the level of 1.3150. The currency, however, could not stay at this level.

On Tuesday, December 31, the New Year's surprise was a noticeable collapse of the pound. The GBP/USD pair sank to 1.3115, losing its hard-won positions, and experts have recorded a clear tendency of a further fall.

The British currency had to put a lot of effort to recover. It was able to overcome a number of obstacles and reach maximum levels on Thursday, January 2, as it rose to an impressive 1.3224, recovering from earlier losses.

At the moment, the GBP/USD pair is trading in the range of 1.3216-1.3217, showing an upward trend. Taking advantage of the lull in the market, the British currency is trying to break out in the lead, and so far, it is still succeeding.

In the last days of 2019, the price of pound rose along with dollar, adding about 300 points. Since this growth was not due to any fundamental factors or macroeconomic indicators, experts fear a resumption of a downward trend in the GBP/USD pair. Analysts do not rule out a fall to the level of 1.2900 or even 1.2800. In case of increasing interest in the tandem in general and the pound in particular, the top target for the pound will be the level of 1.3514. However, analysts believe that the correction will most likely be smoothly flowing into a downward trend.

A number of economists also believe that the coming year will be decisive for the pound as it will have to endure all the difficulties associated with the UK's exit from the EU. Over the past three years, the British currency has experienced huge overloads on the background of Brexit negotiations. In the coming year, UK will have to face the consequences of leaving the European Union and resolve all issues related to this step. According to experts, the country will face geopolitical problems both in Ireland and in Scotland, seeking to leave the United Kingdom. If Prime Minister Boris Johnson fails to reach an agreement on further trade relations with Brussels, it will deal a sensitive blow to the British economy.

Another factor undermining the potential growth of the pound may be December's data on the business activity in the UK manufacturing sector. Their publication is expected today, and according to analysts' forecasts, it will be below the expected value, although a small increase is possible (up to 47.6). In November, the figure was at 47.4. According to preliminary estimates, the overall situation in the manufacturing sector will remain the same, and this will deprive the pound of significant support.

Experts are expecting the British currency to resume its downward trend at the beginning of this month. Economists believe that the pound will experience frequent failures in the future, and from time to time, will have difficulties in growing. This month, the pound will overcome many obstacles to reach the next heights. Its efforts, however, will not be in vain, as experts still believe that it will still be able to recover.