GBPUSD Technical Analysis – December-26-2023
In today’s comprehensive GBPUSD technical analysis, we will first scrutinize the price action of the currency pair. Following that, we will meticulously delve into the fundamental analysis pertaining to the trading asset.
GBPUSD Technical Analysis
FxNews – The GBPUSD pair has been declining in the bearish trend since it reached the December peak at the 1.2792 mark. The market is testing the 38.2% Fibonacci support, which coincides with the Ichimoku cloud. The general outlook of the market is bearish because the pair is hovering above the Ichimoku Kinko Hyo cloud.
The technical indicators present mixed signals. The RSI is near the 50 level, and the Awesome Oscillator bars are small and close to the signal line. From a technical perspective, the price could rise to test the December high if the GBPUSD price remains above the cloud.
On the other hand, if the 50% level of the Fibonacci support is breached and broken, the bullish technical analysis should be invalidated. If this scenario plays out, the bearish trend would extend to the 61.8% level, followed by the 78% Fibonacci retracement level.
Inflation and the British Pound
Bloomberg – The British pound recently rose above $1.27. This happened as investors looked at new data and thought about what the Bank of England might do next. Data from the third quarter showed that the British economy is shrinking. The second quarter data was also adjusted to show a decrease. This makes it more likely that there will be a recession. But retail sales in November were better than expected.
The Consumer Price Index report showed that inflation in the UK is slowing down. It’s now at 3.8%, which is less than the predicted 4.4%. The core inflation rate also fell to 5.1%, which is less than the predicted 5.6%. Because of this, traders think that the Bank of England will cut interest rates next year. They expect a total cut of 143 basis points.
This means that they think there will be five cuts of a quarter-point each, and there’s a 70% chance of a sixth cut. This is despite the fact that Andrew Bailey, the Governor of the Bank of England, has said that he wants to keep rates high for a longer time. Inflation is still almost double the Bank of England’s target of 2%. It’s also the highest out of all the Group of Seven countries.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.