The pound continued to lose ground although inflation data in the UK turned out to be better than expected, which remained unchanged instead of falling. At the same time, no macroeconomic data was published in the United States. In part, the weakening of the pound is due to the fact that market participants continue to express their indignation over Boris Johnson's intentions to pass a law prohibiting the possibility of extending the transition period, which will begin immediately after January 31. Another factor was the weakening of the single European currency, which began to decline after Donald Trump signed the Pentagon budget for next year, which includes measures to counteract the construction of the Nord Stream 2. After all, Germany is the main beneficiary of this project, whose business will receive huge benefits, as soon as the gas pipeline is fully operational. Therefore, a sharp decline in the single European currency pulled a pound.
Today, it is worth paying close attention to the UK again, but not because of the upcoming meeting of the Bank of England board. Moreover, Mark Carney has long explained to everyone that there will be no change in monetary policy before Brexit. Given the new ingenious initiatives of Boris Johnson, and the consequences that may follow, the Bank of England may well extend this decision until the final withdrawal from the European Union. That is, until the end of the transition period. Thus, the monetary policy of the Bank of England will remain unchanged even more than a year. Thus, the market will not react in any way to the outcome of today's board meeting.
However, it is worth paying attention to retail sales. The growth rate of which may slow down from 3.1% to 2.1%. Such a significant decrease in consumer activity will offset the fact that inflation is stable and will have a negative effect on the pound.
Retail Sales (UK):
At the same time, American statistics are expected to be pretty good, which will put even more pressure on the pound. In particular, the number of initial applications for unemployment benefits may decrease by 33 thousand. The number of repeated applications for unemployment benefits is likely to increase by 18 thousand. In general, the total number of applications for unemployment benefits should be reduced by 15 thousand. In addition to this, the volume of home sales in the secondary market should show an increase of 0.8%, which is also a positive factor.
Secondary Home Sales (United States):
In terms of technical analysis, we see that the pair GBP / USD was not particularly active in the past day, but still the downward interest is still preserved. In fact, we see a control rapprochement with the psychological level of 1.3000, from which the pressure expressed in the variable of consolidation is reflected.
Considering the trading chart in general terms, we see that the quote managed to fully work out the upward impulse move that was formed last week.
It is likely to assume that the pressure from the psychological level of 1.3000 will still remain in the market, which may be reflected in the variable chatter along the level. At the same time, it is worthwhile to carefully analyze the price fixing points below the control level [1.3000], since in this case new prospects will open.
Concretizing all of the above into trading signals:
- Long positions are considered in case of price fixing at higher than 1.3100.
- Short positions are considered in case of price fixing at lower than 1.3050, with the first point 1.3001.
From the point of view of a comprehensive indicator analysis, we see that indicators relative to all time sections are considering a further decline. It is also worth considering that minute intervals can give a variable signal due to consolidation.
