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The pound declined quite confidently yesterday under the pressure of circumstances, and this process stopped only in the evening. However, the Bank of England has nothing to do with this. As expected, the refinancing rate was left unchanged, just as the distribution of votes did not change during the voting on this issue. Seven spoke in favor of maintaining the refinancing rate at the current level, while the remaining two in favor of lowering it. In fact, nothing has changed. In addition, the Bank of England made it clear to everyone once again that the refinancing rate will be reduced before the final withdrawal of Great Britain from the European Union, that is, not after January 31, but immediately after the end of the transition period. But this is still a long way off, so there is nothing to worry about so far.
Nevertheless, the pound experienced a certain shock from retail sales data, the growth rate of which slowed from 3.1% to 1.0%. Hysteria is caused by the fact that they predicted a slowdown of up to 2.1%, while the biggest optimists generally counted at 2.3%. But unfortunately, the reality was much worse. In fact, there has been a serious decline in consumer activity, which has never foreshadow anything good.
Retail Sales (UK):
The decline of the pound was stopped only by American statistics, which turned out to be not less frightening. Therefore, the number of initial applications for unemployment benefits fell by 18 thousand, while they predicted a decrease of 33 thousand. On the other hand, the number of repeated applications for unemployment benefits increased by 51 thousand, although it was supposed to increase by 14 thousand. As a result, investors saw their growth instead of the total reducing the number of applications for unemployment benefits. In addition, home sales in the secondary market decreased by 1.7%, instead of increasing by 0.8%.
Secondary Home Sales (United States):
Today, we will see an attempt to repeat what happened yesterday. The pound will initially decline, under the pressure of a slowdown in GDP growth from 1.3% to 1.0%. But unlike yesterday, US statistics will not stop this process, but lead precisely to the growth of the pound, as in the United States a slowdown in GDP growth is projected, from only 2.3% to 2.1%.
GDP growth rate (United States):
In terms of technical analysis, we see that the GBP / USD pair, as expected, managed to get closer to the psychological level of 1.3000, where it slowed down at a small amplitude. In fact, we got a full return of the quotation to the point of beginning, an earlier move, confirming the theory of the emotional component of the market.
Considering the trading chart in general terms, we see that the pound sterling occupies rather high levels relative to the existing movement, which can be reflected in a further decrease in the medium term.
Thus, it is likely to assume that pressure from the side of the level of 1.3000 will locally hold back the quote, which can be reflected in a temporary fluctuation, within 1.2990 / 1.3040, where the behavior of the quote and the price fixing point should be carefully studied.
Concretizing all of the above into trading signals:
- Long positions are considered in case of price fixing higher than 1.3050.
- Short positions are considered in case of price fixing lower than 1.2985.
From the point of view of a comprehensive indicator analysis, we see that indicators, relative to all time sections, retain downward interest which confirms the dynamics of the market.
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