For next year, markets expect Donald Trump's new administration to stimulate growth and curb inflation.
It is expected that softer business regulations and tax cuts will help the US economy to grow, while tougher measures to deal with illegal immigration and the prospect of new tariffs for trading partners may increase price pressure and have a negative impact on the economy in the long term. But overall, according to a combination of factors, the current situation supports the US dollar.
Growing doubts about how many interest rate cuts the Federal Reserve will be able to make next year are also supporting the dollar.
Money market traders are currently pricing in a 38 basis point cut next year, which means they see about a 50% chance that the Fed will make a second 25 basis point reduction.
U.S. retail sales rose 3.8% from November 1 through December 24. This was affected by seasonal sales activity during the holiday season.
Initial jobless claims decreased from 220 000 to 219 000, with the forecasted 223 000. And this indicates that the labor market is still strong, which also supports the U.S. currency.
The British pound, on the contrary, is inclined to weakening, as the conditions for a key rate cut by the Bank of England amid low inflation and a decline in the UK GDP rate are becoming increasingly apparent. These factors contribute to the weakening of GBPUSD in the medium term.
The overall recommendation is to sell GBPUSD.
Profits should be taken at the level of 1.2490. A Stop loss could be set at the level of 1.2550.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
