Although the pound began the new week with explosive growth, a pullback was inevitable. Reports of a real breakthrough in negotiations on a trade deal certainly gave optimism, but the parties were able to close only one issue. An agreement on a level playing field is a good thing, but such delicate issues like the norms of state regulation and subsidizing the economy remain unresolved. London and Paris have two more weeks to do this. And this issue is no less fundamental. If you can't find a common ground on this point, then all sorts of equal conditions lose any meaning. So the pullback was quite expected, and it happened, but not because of Brexit, but because of the coronavirus pandemic. Various officials yesterday suggested that tough restrictive measures could once again be imposed from Wednesday. And this is against the background of countless reports about the beginning of vaccination here and there.
If we talk about what we can expect from the pound today, it is likely that the market will try to close the gap that formed between Friday and Monday. The reason will be the state of the British labor market. Whatever one may say, but the unemployment rate should rise from 4.8% to 5.0%. According to some estimates, it may even grow to 5.1%. And this is against the backdrop of how unemployment continues to decline in Europe and the United States.
Unemployment rate (UK):
At the same time, the dollar's growth will also be supported by data on industrial production. Its decline in the United States could slow from -5.3% to -5.0%. And even if we are still talking about a decline in industrial production. The recovery trend is positive.
Industrial Manufacturing (United States):
The GBPUSD pair showed high activity yesterday, where a gap of more than 140 points was initially reflected, and then an upward movement by another 150 points. Speculative activity is off the charts, as evidenced by the ratio of speculative transactions and high volatility.
The local high, also known as the resistance level, was the 1.3444 coordinate.
Based on the quote's current location, you can see a consolidation movement within the 1.3310/1.3350 range, which signals the process.
Considering the trading chart in general terms, the daily period, we can see that the quote is moving along the trajectory of a medium-term upward trend.
We can assume that price fluctuations in the 1.3310/1.3350 range will not last long, and soon it will start to pick up the pace. The most optimal trading tactic is the method of surpassing one or another border, working for a local surge in activity.
- Buy positions should be considered above 1.3355, with the prospect of a move to 1.3370-1.3400.
- Sell positions should be considered below 1.3300, with the prospect of a move to 1.3265-1.3220.
From the point of view of complex indicator analysis, you can see a versatile signal, where minute intervals work within the boundaries of stagnation at 1.3310/1.3350, signaling a buy, while hourly intervals work on a downward trend from resistance at 1.3440.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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