GBPUSD on the way up due to the Fed's monetary decisions

19 December 2023 122
GBPUSD on the way up due to the Fed's monetary decisions

During yesterday's session, the GBPUSD currency pair continued the decline that started last week.


Deputy Governor of the Bank of England Ben Broadbent said that due to the unclear situation on the labor market in the UK, the bank is in no hurry to make a forecast on inflation and a decision to change the interest rate. He emphasized the uncertainty in the wages data, noting that the regulator is trying to understand whether the wage growth is temporary or related to a shortage of skilled workers. If skills shortage is the problem, it may require long-term changes to the economy and monetary policy.


On Dec. 14, the Bank of England left its main interest rate at 5.25%, the highest since 2008.


At the same time, the U.S. national currency is also under pressure due to the Federal Reserve's (Fed) forecasts of likely monetary policy easing next year.


A week earlier, expectations of the market regarding the 0,25% key rate cut by the U.S. regulator in March rose sharply. In 2024, according to representatives of the U.S. central bank, its values will be reduced by 75 basis points. At the same time, the current rate still remains in the range of 5.25-5.50%, the agency notes. 


The latest comments of Fed Chairman Jerome Powell had a negative impact on the dynamics of the dollar. The U.S. currency continues to correct ahead of the release of new data that could support its rate, said Trader X market analyst Michael Brown.


As investors are showing increased interest in the Fed's future monetary policy, the pair's pricing will depend more on the dollar.


GBPUSD quotes are forming a new uptrend on the D1 timeframe.


In terms of wave analysis, the price is currently forming the second descending wave on the H1 timeframe. The divergence of the Stochastic Oscillator indicator (standard values) portends a change in the direction of the currency pair and the transition to the third upward wave.



Short-term prospects for GBPUSD suggest buying

The target is at the level of 1.2900.

Part of the profit should be taken near the level of 1.2780.

A stop-loss could be placed at the level of 1.2510.

The bullish trend is short-term, so trade volume should not exceed 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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