GBP/USD: Sterling on its way to 1.2579
Sterling has shown strength in the markets following the release of surprisingly strong UK GDP data. Unexpected growth of 0.1% in the fourth quarter, which beat expectations of contraction, boosted the British currency to levels near 1.25155 against the US dollar. Trade balance data has not accompanied being far away from expectations, as well as investment data. The construction data has also been very disappointing, so the data has not been consistent for the UK in an absolute growth sense.
Monetary Policy Impact: However, the recent interest rate cut by the Bank of England has introduced volatility into the pair. Following this cut, GBP/USD closed around 1.24, establishing key support at 1.23698 and immediate resistance at the last high recorded last Thursday. This contrast between positive economic growth and looser monetary policy creates an uncertain near-term scenario. Expectations about possible changes in U.S. trade policy - including future tariffs - add an additional layer of uncertainty. There are contrarian voices in the currency's likely evolution, with some analysts arguing that the pound's strength could be maintained despite rate cuts, while others warn that inherent volatility will continue to be a major concern. There are contrarian voices in the possible evolution of the currency, while some analysts argue that the strength of the pound could be maintained despite the rate cuts, others warn that the inherent volatility of the market and adjustments in monetary policy could lead to sharp movements in the pair. The latter view is more likely to be predicted than the former as the UK is not enjoying its pre-Brexit strength and its movement has been steadily declining since September last year, and reversing a trend in this case is going to be difficult for policy makers due to the general weakness in UK debt, so much so that many are talking about the problem being generated and an attempt to return to the European Union.
Technical Analysis
The pound strengthened, reaching levels near 1.25155 against the US dollar However, the recent rate cut by the Bank of England has introduced volatility in the pair. Following this cut, GBP/USD closed around 1.24, placing key support at 1.23698 and immediate resistance at last Thursday's recent high where it reached its last resistance zone. This contrast between positive economic growth and looser monetary policy creates an uncertain near-term scenario. It is worth keeping an eye on the resistance zone, if the pair manages to overcome the barrier at 1.25493, the next target would be around 1.26. Conversely, a break below the support at 1.23739 could open the door to declines towards levels near 1.22. Currently, the important trading zone for the pound is located at 1.25318 marked by the Check Point (POC). RSI is signaling an overbought high at 68.76% at the start of the European session, this does not mean that the pair can hold beyond the indicated middle zone around 1.25798 which is where the strong resistance is located to prove the validity of a pound marked as weak these last six months.
Conclusion
Despite the initial GDP momentum, the pound faces mixed signals. The recent rate cut has generated volatility, placing support at 1.23698 and resistance between 1.25493 and 1.25798. If resistance is broken, the pair could reach 1.26; otherwise, a drop below support could drag it down to 1.22. Traders should keep an eye on these key levels in a scenario of uncertainty.
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
Monetary Policy Impact: However, the recent interest rate cut by the Bank of England has introduced volatility into the pair. Following this cut, GBP/USD closed around 1.24, establishing key support at 1.23698 and immediate resistance at the last high recorded last Thursday. This contrast between positive economic growth and looser monetary policy creates an uncertain near-term scenario. Expectations about possible changes in U.S. trade policy - including future tariffs - add an additional layer of uncertainty. There are contrarian voices in the currency's likely evolution, with some analysts arguing that the pound's strength could be maintained despite rate cuts, while others warn that inherent volatility will continue to be a major concern. There are contrarian voices in the possible evolution of the currency, while some analysts argue that the strength of the pound could be maintained despite the rate cuts, others warn that the inherent volatility of the market and adjustments in monetary policy could lead to sharp movements in the pair. The latter view is more likely to be predicted than the former as the UK is not enjoying its pre-Brexit strength and its movement has been steadily declining since September last year, and reversing a trend in this case is going to be difficult for policy makers due to the general weakness in UK debt, so much so that many are talking about the problem being generated and an attempt to return to the European Union.
Technical Analysis
The pound strengthened, reaching levels near 1.25155 against the US dollar However, the recent rate cut by the Bank of England has introduced volatility in the pair. Following this cut, GBP/USD closed around 1.24, placing key support at 1.23698 and immediate resistance at last Thursday's recent high where it reached its last resistance zone. This contrast between positive economic growth and looser monetary policy creates an uncertain near-term scenario. It is worth keeping an eye on the resistance zone, if the pair manages to overcome the barrier at 1.25493, the next target would be around 1.26. Conversely, a break below the support at 1.23739 could open the door to declines towards levels near 1.22. Currently, the important trading zone for the pound is located at 1.25318 marked by the Check Point (POC). RSI is signaling an overbought high at 68.76% at the start of the European session, this does not mean that the pair can hold beyond the indicated middle zone around 1.25798 which is where the strong resistance is located to prove the validity of a pound marked as weak these last six months.
Conclusion
Despite the initial GDP momentum, the pound faces mixed signals. The recent rate cut has generated volatility, placing support at 1.23698 and resistance between 1.25493 and 1.25798. If resistance is broken, the pair could reach 1.26; otherwise, a drop below support could drag it down to 1.22. Traders should keep an eye on these key levels in a scenario of uncertainty.
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.