GBP/USD Forecast: No reasons for the Pound to advance
GBP/USD Current Price: 1.2965
- UK data mixed but mostly worrisome with no growth and falling Industrial Production.
- Tensions between the UK and the EU keep weighing on the Pound.
- GBP/USD advanced for a second consecutive day but remained below 1.3000.
The GBP/USD pair has posted a modest advance for a second consecutive day, hovering now around 1.2950. Data coming from the UK was quite discouraging as the preliminary estimate of Q4 GDP came in at 0% as expected, while Industrial Production rose a modest 0.1% MoM in December, and declined by 1.8% yearly basis, missing the market’s expectations. Manufacturing Production in the same period was also disappointing, down by 2.5% YoY.
In the Brexit front, European Commission President Ursula von der Leyen responded to UK PM Johnson’s words about his desire of a Canada-style deal, indicating that, given the “unique” level of access Britain would have to the bloc’s single market, the UK mist stick to tough rules to prevent any harm to the EU economy. EU’s Barnier warned UK leaders no to “kid themselves,” as Brussels won’t give a special deal related to financial services. BOE’s Carney spoke before the Economic Affairs Committee, and among other things, he said that some stimulus might be required to get back to trend growth.
GBP/USD short-term technical outlook
The GBP/USD pair’s recovery had more to do with an easing dollar than with Pound’s strength. Despite advancing, the bullish potential is limited, according to the 4-hour chart, as the pair has settled above its 20 SMA while technical indicators turned flat after entering positive territory. The price, however, continues to develop below the 100 and 200 SMA. The pair has an immediate resistance at 1.2975 but would need to run beyond 1.3030 to turn bullish.
Support levels: 1.2900 1.2865 1.2820
Resistance levels: 1.2975 1.3000 1.3030
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
