Forex Analysis & Reviews: 14.12.2022 - GBP/USD. The pound rally...

14.12.2022 11:46 PM

GBP/USD. The pound rally suggests another powerful growth

It seems that inflation has finally passed its peak. The slowdown in the consumer price index occurred not only in the U.S., but also in the UK, which should support the pound.

Consumer prices in Britain rose 10.7% in November from a year earlier, versus the 10.9% expected by markets and up from 11.1% in October. Monthly inflation was also better than forecast.

Analysts and market players are now starting to form their forecasts on the basis that inflation will continue to gradually decline over the next year. Global price pressures will ease, and the economic slowdown will partially relieve the pressure on prices.

Thus, the pound is confidently bypassing the hurdles and aiming for a continued short-term rally. However, there are two more important hurdles ahead - the Federal Reserve and Bank of England meetings.

In the meantime, things are looking up for GBP/USD and it might just jump before the Christmas break.

The pound rose to 6-month highs at 1.2400 on Tuesday after a softer-than-expected U.S. inflation report. This indicator, according to investors, gives the Fed the green light to slow down the rate hike cycle.

The U.S. central bank may offset such expectations with its remarks. However, a lot is already built into the dollar's quotes. If the outcome of the meeting and Fed Chairman Jerome Powell's speech go against formed market views, volatility will spike. It is unlikely to favor the pound in this case.

Investors are now confident that a softer inflation figure will allow the Fed to slow the pace of rate hikes to 25 bps early next year. With the labor market still seemingly resilient, the ISM services sector index still strong, and financial conditions softening, the Fed is likely to say that it has more work to do.

A lot depends on the tone of Powell's speech. If traders find him aggressive, then the dollar could recover some of its losses, pushing both GBP/USD and EUR/USD off the pedestal.

Still, the short-term picture, including the technical one, is on the side of the growth of the pound and the euro against the dollar. Weakness may appear at some time, but it will be limited.

The Fed is dependent on incoming data. Given recent macro data, it will have a hard time convincing markets to continue to work for higher bond yields and the dollar.

2023 looks like a game changer. Market players believe that the central bank will end the cycle of raising rates, so they are already beginning to assess the prospects of lower interest rates.

The dollar looks so impressive only because of the U.S. rate hike. It's not hard to guess where it will be once the pace of policy tightening actively slows.

"We expect US dollar weakness to continue in 2023 given our out of consensus view of more aggressive rate cuts by the Fed in the second half of 2023 than by other central banks," says Georgette Boele, Senior FX Strategist at ABN AMRO.

The target for the GBP/USD pair for the end of the year is the 1.2500 mark. This is the low.

The pound continues to stay in the green ahead of the Fed meeting, although it is below 1.2400. Scotiabank economists believe that bulls will attack 1.2450.

The current uncertainty of the pound is very similar to the consolidation of forces before the next upward jerk. With a certain combination of events, traders can test the strength of the 1.2600 and 1.2700 marks.

你今天已经点赞上这篇文章了

*这里的市场分析是为了增加您对市场的了解，而不是给出交易的指示。

If you have any content questions, please contact editorial-board@instaforex.com

News

该作者的更多文章

EURUSD

Euro vs US Dollar

选择时间框架

分钟

小时

天

周

开始交易

通过InstaForex赚取加密货币汇率变动的收益。

下载MetaTrader 4并开启您的第一笔交易。

推荐文章

Robinhood 從 S&P 500 中移除 — 多米諾效應衝擊全球市場

每日對比：日經指數上升，歐元下滑，全球市場屏息以待美中會談

6月11日美國市場新聞摘要

今日對比：日經指數上升，歐元下跌，全球在美中會談前屏息以待

利率上升：市場等待消費者價格指數（CPI），特朗普與馬斯克發生衝突，Qualcomm收購Alphawave

6月10日美國市場新聞摘要

Robinhood 從 S&P 500 降級 — 多米諾效應影響整個市場

市場等待CPI，利率上升，特朗普與馬斯克交鋒，高通收購Alphawave

泰坦之爭：Musk與Trump的對決，投資者計算損失

市場分歧：美國股市停滯，亞洲加速

Top analytics