On Thursday, under overall market pressure, while the dollar index fell by 0.95%, the British pound rose by 62 points. The signal line of the Marlin oscillator reached the limit of the ascending trend line – the risk of a downward reversal of the oscillator from the current values has increased.
Several British macro data will be released today with all the indicators showing negative outlook; GDP for November is expected to fall by 0.2%, the trade balance might drop from -14.5 billion GBP to -14.9 billion GBP, November industrial production may show the decline of 0.2%, the construction sector production might contract by 0.3%. Even on such an indicator as the misuse of mortgages may worsen the quarterly index from -£5.1bn to -£7.9bn.
As a result, I don’t expect the British pound to strengthen in the coming days. In the best case, it may settle at the support of 1.2155 (low of May 13, high of November 24). In the future, in case the local trend for weakening the dollar continues, the pound can rise to the target level of 1.2410 (high on June 16).
On the four-hour chart, as we expected in the previous review, the divergence has formed. But in the current environment, where markets had a strong bullish momentum yesterday with the release of the US inflation report, the divergence looks weak and might turn into a sideways swing. I expect the price consolidation to end and further developments next week.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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