The pair GBP / USD on Friday failed to reach the target at 1.40. The disappointing data on retail sales, which came out much worse than the forecast level (-1.5% against the forecast of -0.6%), became an obstacle to the price movement. Thus, we received another confirmation that the current growth of the pair is largely due to the weakness of the US dollar, and not the strength of the British currency. The British economy continues to experience difficulties due to the uncertainty of Brexit conditions. This is clearly seen in the deteriorating economic data from the UK. This week we are expected by important data on the country’s GDP for the 4th quarter, but the decrease in expenses that we have seen over the past three months indicates that the figure will rather be lower than the projected growth of 0.4%.
No less important for market participants will be data on the labor market, especially interesting dynamics of the average wage in the country. The data will be published on Wednesday, and this time neither in the UK nor in the United States is expected statistical data, therefore, the bidding will most likely take place mainly under the predominant influence on the pair of US currency, which will remain under pressure from the political struggle in the country and further uncertainty Fed action.
Although technically the situation on the chart remains quite positive. The price grew even against the background of declining technical indicators, allowing the latter to slightly deviate from their peak values. Accordingly, the pair retains a very good chance to achieve the goal at the level of 1.40. The nearest strong support for the pair is at 1.3755 and while the price will be kept above this level, the main scenario for us is the further price increase.
Our recommendations: buy a pair with a decline to the level of 1.3755.
Review prepared by Fort Financial Services Research Department. Follow our publications!