The pound was significantly declining at the end of last week unlike the single European currency. At the same time, the strongest movement strangely coincided in time with the publication of American statistics, which, the common European currency, simply ignored.

At the same time, the pound had honest reasons for optimism, as Nationwide data showed an acceleration in the growth rate of housing prices, from 1.9% to 2.3%. And given the high importance of the real estate market for the investment attractiveness of the British economy, rising prices should contribute to the pound; however, that did not happen. Honestly, we can refer to the speech of Haldane from the Bank of England, who did not exclude the possibility of a sharper reduction in the refinancing rate, due to the circumstances. Firstly, due to the risks that the coronavirus poses to the global economy. But again, the main movement took place much later than his speech.

Nationwide Housing Price Index (UK):

On the other hand, American statistics were not so clear. After all, personal income increased by 0.6%, and only by 0.2% in income. In many ways, this indicates that consumer activity is not significant if it continues to grow. However, one must take into account the fact that personal income increased by only 0.1% in the previous month, while expenses increased by 0.4%. It turns out that outrunning revenue growth is a simple compensation for the imbalance that arose in the previous month. Thus, nothing interesting happens, and consumer activity can continue to increase. But, it is worth paying attention to wholesale stocks, which, according to preliminary data, decreased by another 0.2%.This means that stocks are declining for the second month in a row, which means that consumer activity is not declining, and there are prospects for the beginning of the restoration of industrial production. So this could be the reason for the weakening pound.

Wholesale Stocks (United States):

Today, there is a lot of extremely interesting data in the UK that can allow the pound to slightly improve its position. The first thing you should pay attention to is the final data on the index of business activity in the manufacturing sector, which should increase from 50.0 to 51.9. However, you should not wait for some incredible reaction, since this is what the preliminary data showed, which are clearly already included in the value of the pound. But the data on the lending market can be extremely interesting, especially when you take into account the fact that the volume of mortgage lending should grow from 4.6 billion pounds to 4.8 billion pounds. The number of approved mortgages should increase from 67,241 to 68,200. And this is all about the real estate market, which is extremely important for the British economy. At the same time, the pound will be constrained by data on private lending, the volume of which should be reduced from 5.8 billion pounds to 3.8 billion pounds. And such a significant reduction will obviously have its negative impact.

Mortgages Approved (UK):

The totals for the index of business activity in the United States should show a decrease from 51.9 to 50.8. However, as in the case of Great Britain, this regrettable fact was already taken into account at the time of publication of the preliminary data. On the other hand, investors will be offered similar data from ISM, which are not optimistic, because according to forecasts, the index of business activity in the manufacturing sector from ISM should be reduced from 50.9 to 50.2.

ISM Manufacturing PMI (United States):

In terms of technical analysis, we see a downward momentum, which brought the quote to the level of 1.2770 and then formed a rebound. In fact, we are talking about overheating short positions, which were a priority throughout the past week, having a decline of more than 250 points.

Considering the trading chart in general terms, we see that the downward development is still relevant, the clock component has already been changed, and there may be a recovery in the future, relative to the medium-term trend.

It is likely to assume that against the background of such a sharp decline, we can see a price return to the area of 1.2865 / 1.2900, where a reverse course will be considered relative to these values.

Concretizing all of the above into trading signals:

- Long positions are looking towards the range of 1.2865 / 1.2900.

- We consider short positions in terms of deferred actions, if one of the options is fulfilled: 1) Slowdown in the area of 1.2865 / 1.2900, with a rebound down; 2) The current correction has already reached the phase of regrouping of trading forces, where the quote slows down and is fixed lower than 1.2800.

From the point of view of a comprehensive indicator analysis, we see that hourly and daily periods remain downward interest, while minute intervals respond to local correction.