empty
 
 

Forex Analysis & Reviews: GBP/USD. The pound is up on the wing. Santa Claus rally will take it to the sky
time 06.12.2022 11:43 PM
time Relevance up to, 07.12.2022 12:09 PM

This image is no longer relevant

The stock market is lower and the pound falls against the dollar at the beginning of the week. These dynamics once again confirm that the British currency depends on the mood of global investors.

The upcoming events will show whether GBP/USD will fall even deeper.

Fundamental indicators have pushed the dollar to rise, with the US currency index settling above the 105.00 mark.

This image is no longer relevant

The ISM said its non-manufacturing PMI increased to 56.5 in November, well ahead of analysts' expectations of 53.3 and an acceleration from 54.4 in October.

The rebound in activity followed a better-than-expected employment report on Friday. Both indicators suggest that the Federal Reserve still has more work to do to cool the economy and lower inflation.

Strong services PMIs along with a similar NFP could push the Fed into a more hawkish policy, although market players are mostly banking on a 50 bps rate hike in December.

Wall Street's influence

The stock market rally made it possible for the pound to hit new 6-month highs against the dollar. Investors were confident that the Fed would slow the pace of interest rate hikes. Risk appetite was also boosted by signs of continued easing of Covid restrictions in China.

Stocks are now retreating from the highs as investors feel uncertain about their recent monetary policy judgment. In addition, the gains in stock indices have been substantial and tactical investors are looking to lock in decent profits.

Morgan Stanley thinks it is worth considering taking profits after the S&P 500 reached its target of 4,000-4,150.

This image is no longer relevant

Over the past two months, the S&P 500 Index has gained about 16%. While this is a decent result, it is hard to trust such a recovery because little has really changed. Corporate earnings estimates remain high and data momentum continues to weaken. Higher interest rates are dampening economic activity, making next year's rosy earnings estimates vulnerable to downward revisions.

The pound likes to be strong

GBP/USD has gained about 18% recently, showing gains in eight out of ten sessions. The pound has recovered 50% from September's unprecedented lows. Despite retreating from multi-week highs, analysts continue to see potential for further gains in the short term. Bulls may try to test the 1.2400 mark.

The GBP/USD pair, from the analysts' point of view, deserves close attention after such an impressive price movement. The dollar and the Fed's monetary policy are still the main themes on the markets. At the same time, it is worth looking at the technical component of the case as well.

Over the past couple of months there has been a clear shift in the pound's fortunes. Yes, part of this movement is due to the fact that the finances of the British government are now in safer hands. However, it is also impossible not to notice the change in the British currency outside of the dollar and Britain's political games.

If the interest rate cycle in the US has really reached its peak, as investors think, then the pound will be able to keep its highs.

The dollar index has lost 9% since its September peak. Its further decline will allow the GBP/USD pair to choose the next target at 1.2600.

Many analysts, including Nomura, believe that the pound can reach this high.

This image is no longer relevant

Nomura analysts believe that current market sentiment depends not so much on specific currency factors, but rather "is the beta to risk sentiment positive or not?".

Overall, Britain doesn't exactly shine from a macroeconomic perspective compared to its other European peers. The housing market is in decline, the Bank of England is softer, budget spending is lower, and investment flows are weak. Nevertheless, the pound has good prospects.

At the end of the year, investors are reassessing positions on major deals and winding down. Nomura thinks market players will also give up on shorting the pound.

The pound is having a hard time holding on while stock markets continue to rise. Therefore, whether there could be a "Santa Claus rally" in the coming days could be key to how far the pound rises.

It is possible that the GBP/USD will break through to 1.2500 by the middle of December. It is a little earlier than we thought. If the scenario comes true, the next mark will be 1.2670.

Natalya Andreeva,
Chuyên gia phân tích của InstaForex
© 2007-2023
GBPUSD
Great Britain Pound vs US Dollar
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Start trade
Start trade

InstaForex analytical reviews will make you fully aware of market trends! Being an InstaForex client, you are provided with a large number of free services for efficient trading.

  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    THAM GIA CUỘC THI
  • Tiền gửi lần truy cập
    Ký quỹ tài khoản của bạn với $3000 và nhận được $1000 nhiều hơn!
    Trong Tháng 02 chúng tôi xổ $1000 trong chiến dịch Chancy Deposit!
    Có được một cơ hội giành chiến thắng bằng việc ký quỹ $3000 vào một tài khoản giao dịch. Đáp ứng được điều kiện này, bạn trở thành một người tham gia chiến dịch.
    THAM GIA CUỘC THI
  • Giao dịch khôn ngoan, thành công
    Nạp tiền vào tài khoản của bạn với ít nhất $ 500, đăng ký cuộc thi và có cơ hội giành được các thiết bị di động.
    THAM GIA CUỘC THI
  • 100% tiền thưởng
    Cơ hội duy nhất của bạn để nhận 100% tiền thưởng khi gửi tiền
    NHẬN THƯỞNG
  • 55% Tiền thưởng
    Đăng ký tiền thưởng 55% cho mỗi lần gửi tiền của bạn
    NHẬN THƯỞNG
  • 30% tiền thưởng
    Nhận 30% tiền thưởng mỗi khi bạn nạp tiền vào tài khoản của mình
    NHẬN THƯỞNG

Recommended Stories

The dollar retains intrigue

The euro and dollar held steady, traders around the world are waiting for Federal Reserve Chairman Jerome Powell to explain. The U.S. currency index opened Tuesday near 103.50. There

Anna Zotova 09:25 2023-02-07 UTC+2

The currency market is in the mood to sell the pound

The British pound is feeling very uncertain against the euro and the dollar, and especially after the release of unexpectedly strong data from the U.S. Assets, which are very risk

Natalia Andreeva 22:56 2023-02-06 UTC+2

European markets opens the week lower

On Monday, major Western European indexes were down by 1% and more amid the general decline of the world stock markets. In this case, new macro data on the region

Irina Maksimova 22:56 2023-02-06 UTC+2

The dollar held firm after good U.S. jobs data, the lira hit a record low

The dollar held firm after good U.S. jobs data, the lira hit a record low The dollar held firm against the euro on Monday as traders believe the U.S. Federal

22:56 2023-02-06 UTC+2

Asia's major stock indices trading mainly in red

Major indices of the Asian region are trading in the negative territory today, with a decline of up to 2.2%. Australia's S&P/ASX 200 sank less than other indices, by just

15:05 2023-02-06 UTC+2

Gold advances amid upsurge in precious metal market

Gold began this week in positive territory, recouping the losses it had sustained at the end of last week. Early on Monday, the precious metal gained 1% and rose

Maria Shablon 14:09 2023-02-06 UTC+2

EUR/USD: euro seeks growth opportunities as US dollar remains under pressure from statistic data

The US currency began this week on the back foot. USD retreated significantly after an earlier upsurge triggered by US labor market data. The euro took advantage of the situation

Larisa Kolesnikova 08:33 2023-02-06 UTC+2

Asian stock indices show mixed performance

The main Asian indicators are trading mixed today. Thus, the Chinese Shanghai Composite and Shenzhen Composite indices were down quite significantly by 1.37% and 1.43% respectively. The Hong Kong Hang

13:18 2023-02-03 UTC+2

US stock market closed mixed, Dow Jones down 0.11%

The US stock market closed Thursday's trading in mixed directions due to the strengthening of the technology, consumer services and industrial sectors. The market demonstrates against the backdrop of negative

Thomas Frank 04:50 2023-02-03 UTC+2

Gold at the peak of popularity: what to expect in the coming year

The weak U.S. dollar and the Federal Reserve's easing monetary policy are pushes precious metals to extend gains. And not only in the short term, but also in the long

Maria Shablon 22:59 2023-02-02 UTC+2
Không thể nói chuyện ngay bây giờ?
Đặt câu hỏi của bạn trong phần trò chuyện.