LiteForex: GBP/USD: the growth slowed
Current trend
This week the pair was growing, and by the end of the week it has renewed the 3-year highs around 1.3943, gained 1.6%.
Today the growth slowed, as the instrument is under influence of two opposing factors. On the one hand, the dollar is under pressure of the crisis upon the federal government funding, which expires on December 19. The House of Representatives approved the prolongation law on Thursday, however, the democratic part of the Senate promises to block it. In this case, a number of government structures will suspend its work, and around 800K of the employers will have to set a vacation.
On the other hand, the pound cannot grow further due to poor UK Retail Sales release. In December, the index decreased by 1.5% and Retail Sales ex-Fuel – by 1.6%. The analysts consider the fall is because the peak of buyers’ activity coincided with the November sales season. In addition, high inflation level affects the Retail Sales negatively, as it has fallen from its high of 3.1% to 3.0% only in December. The member of Monetary Policy Committee of the Bank of England Michael Saunders has mentioned the long-term negative influence of the high inflation to the UK economy.
Support and resistance
The price reached the resistance zone of 1.3915–1.3965 (Murray [6/8], Fibonacci correction 38.2%). After the rebound the growth to the levels of 1.4040 (Murray [7/8]) and 1.4160 (Murray [8/8]) is possible. However, the reversal of Stochastic in the overbought area and the possible exit of it reflects the risk of the downward correction to the levels of 1.3672 (Murray [4/8]) and 1.3550 (Murray [3/8], the middle line of Bollinger Bands).
Resistance levels: 1.3965, 1.4038, 1.4160.
Support levels: 1.3794, 1.3672, 1.3550.
Trading tips
Short positions can be opened at the level of 1.3793 with the targets at 1.3672, 1.3550 and stop loss at 1.3830.
Long positions can be opened after the price is set above the level of 1.3965 with the targets at 1.4038, 1.4160 and stop loss at 1.3940.
