All in all, the did not change yesterday, closing at the same levels it started trading at the beginning of the day. Overall, it came as no surprise because the macroeconomic calendar was completely empty yesterday. However, during the course of the trading day, the pound sterling dropped sharply and then recovered quickly.
The plunge came as a result of the aggravating coronavirus situation in the United Kingdom. Therefore, the subsequent increase in price can hardly be explained. Meanwhile, data is due today in the United States. Ahead of the release, sterling was volatile.
Given the importance of US inflation, a sideways movement should have been expected. Ultimately, this is exactly what happened, since GBP remained unchanged at the end of the trading day. Anyway, US inflation is estimated to slow down to 4.9% from 5.0%. In this light, the greenback will definitely strengthen.
As it turns out, growing inflation is indeed temporary, which means it does not pose a threat to the economic recovery. In fact, inflation is slowing, which is an extremely positive factor. Therefore, a temporary fall in the value of the pound sterling yesterday can be interpreted as preparations for today’s release of inflation data in the United States.
After surging on Friday, GBP/USD reached the resistance level of 1.3900 where the volume of long positions decreased. As a result, the quote came to a standstill and pulled back.
The market dynamic is relatively high even at the stage of stagnation, showing an increase in speculative trading.
The quote is moving along the resistance level of 1.3900 at the moment.
Supposedly, the bearish trend will resume. For this to happen, the pair should consolidate below 1.3835. Otherwise, we can expect an extension of the corrective move.
In terms of complex indicator analysis, technical indicators are giving a sell signal on the M1 chart, focusing on a pullback from the 1.3900 resistance level. The H1 chart is making a buy signal based on the corrective move.
Need Your Help Today. Your $1 can change life.