The downtrend continues. Despite the significant shift of the resistance line, the trend reversal did not happen and the rates again strived down. This year, the pound had a good chance, given the hawkish mood of the Bank of England. Particularly last week, a rate hike began, most likely not the last one this year. However, so far, against the background of a strong dollar, this is not enough. In the US, the value of treasury bonds is rising, strengthening the dollar, and good macroeconomic reports support the value of the dollar at a high level. The dollar also continued supporting, taking into account expectations of a Fed rate hike. At the same time, the pound was under pressure due to its “old” disease called Brexit. Recall that there are still issues of EU trade with Northern Ireland, across the borders of Britain.
Volatility remains high this week. Investors are waiting for the speech of the Head of the Bank of England to receive signals about further rate hikes. We are also waiting for the publication of Britain's GDP in the 4th quarter, the trade balance and at the end of the week - the weekly report on the US labor market.
Most of the technical analysis tools indicate the effectiveness of the deals to SELL, in favor of GBP, in anticipation of the continuation of the trend. We believe that such deals will be the most effective choice for now, although the downward movement will be limited in the near future, and the pound may get a lot of chances to recover this week. At the same time, if you look at the daily chart, there is less and less doubt that everything is in favor of USD.
