In November, the 1.25 level acted as resistance, but after a bullish breakout, it began to provide support (as shown by the black arrows).
However, recent events are increasing bearish pressure. Among them:
→ yesterday's news on inflation in the US, the values of which were in line with expectations. It is worth paying attention to Core CPI MoM, the values of which remain equal to 0.3%, or 3.6% in annual terms. This category includes prices for services where inflation is difficult to overcome. So Powell's oft-repeated words that “the path to 2% will be difficult” take on more relevance. Today, by the way, another speech by the head of the Fed is scheduled for 22:30 GMT+3. It will take place after the announcement of interest rates at 22:00 GMT+3, which is expected to remain unchanged.
→ news today that the UK economy contracted in October. GDP decreased by -0.3%, although -0.1% was expected. This could strengthen the case that the Bank of England at its meeting (tomorrow at 15:00 GMT+3) will signal a faster rate cut than in other countries.
The chart shows that the dollar continues to strengthen. The situation is similar to what is happening on the EUR/USD market, which we wrote about yesterday.
→ the GBP/USD rate is still in an ascending channel (shown in blue), but the bears are trying to push it;
→ the bulls can be supported by the psychological level of 1.25;
→ level 1.26 yesterday worked as resistance.
If the price consolidates below 1.25, this could indicate an important change in market sentiment and an increase in the likelihood of a bearish scenario, as indicated by the red arrows.
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