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Last week ended with the pound still weakening, although slower compared to the past few days. Moreover, it was strange that there was an actual reason for this – car production. The rate of decline in vehicle production in the United Kingdom accelerated from -2.3% to -27.3%. In general, this is quite consistent with what is happening with British industry.
Car Manufacturing (UK):
Today, it seems that the pound's correctional movement will resume, if investors will pay attention to macroeconomic data. In particular, we are talking about UK''s lending market data, whose forecasts are not very pleasing. Here, the volume of mortgage lending is expected to fall from 5.6 billion pounds to 5.1 billion pounds. Meanwhile, the number of approved mortgage loans should decline from 103.0 thousand to 97.5 thousand. It is worth noting that the real estate market is one of the main criteria for the investment attractiveness of the British economy. Lastly, the total volume of consumer lending could be lowered by another 1.7 billion pounds, although it was already down by 1.0 billion pounds last month.
In general, the dynamics of the lending market clearly indicates that the British economy is not doing well. Therefore, all the growth of the pound, which we have seen for quite a long time, is clearly speculative.
Consumer lending (UK):
After a prolonged growth, the GBP/USD pair found a resistance point in the area of 1.400/1.4225, where a stop occurred, resulting in a price reversal. Considering the scale of the upward trend and the time frame of the medium-term trend, the pound's overboughtness continues in the market.
The dynamics in the market reflects the growth during the previous week, which is confirmed by the framework of the trading candles and the speculative behavior of market participants.
Based on the quote's current location, the amplitude movement along the area of the psychological level 1.3950/1.4000/1.4050 will be visible.
Considering the general trading chart, the daily period, a pullback is seen at the high of the trend, but the pound has not declined enough before the correction stage.
We can assume that the price holding below the level of 1.3950 will continue to affect the volume of short positions, which will make the formation of the correction more likely. Further speculative manipulations are expected in the market after last Friday's low of 1.3887 is updated, which may well open the way towards the 1.3750 mark.
An alternative scenario considers a slowdown in the price along the psychological level, in the form of an amplitude fluctuation in the price.
From the viewpoint of comprehensive indicator analysis, it shows that the indicators of technical instruments on a minute time frame have a variable signal (buy/sell) due to the fluctuation stage along the area of the psychological level. The hourly period, in turn, is focused on selling due to the pullback stage from the trend high; while, the daily one is still following the main trend, with a buy signal.
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