UK’s Economic Outlook Worries as Pound Set to Depreciate

Fundamental Analysis GBPUSD Key Takeaways 

UK economic instability: The British Retail Consortium said on Tuesday that sales in the last quarter of 2024 were disappointing. On Thursday, Bank of England Deputy Governor Breeden will speak in Edinburgh on the outlook for UK inflation and monetary policy, from which the market will look for future economic prospects. 

UK market preemption: In the past few days, UK bonds have fallen sharply, with 10-year yields hitting a new high since August 2008 and 30-year yields also rising to the highest level since 1998. The pound fell to its lowest point since April. UK stocks plummeted, with the FTSE 250 mid-cap index expected to record its biggest two-day drop since August. 

Pressure on the UK government: British investors are particularly worried that lingering price risks will make the Bank of England cautious about cutting interest rates, while rising yields may force the Labour government to raise taxes or further increase borrowing. The market expects the Labour government to speed up its review of public spending and cut spending in a restrained manner without affecting GDP. 

Technical Analysis GBPUSD Daily Chart Insights 

(GBPUSD Daily Price Chart, Source: Ultima Markets MT4) 

Stochastic oscillator: The indicator is entangled and oscillating above the oversold area, suggesting that the current long and short trends are unclear. However, based on the fact that the exchange rate has always been below the downward trend line, the short signal of the indicator yesterday indicates that it is worth paying attention to the intraday short-selling opportunities during today’s Asian session. 

Pin Bar: GBP/USD showed a downward pin bar on Tuesday. After yesterday’s downward trend broke through Monday’s opening price, it can be clearly seen that the pound has a greater depreciation pressure in the short term. 

GBPUSD 1-hour Chart Analysis 

(GBPUSD H1 Price Chart, Source: Ultima Markets MT4) 

Stochastic oscillator: The indicator is currently in an upward trend and is about to approach the 50 median line. Based on yesterday’s strong decline, the indicator should not easily choose to short before it returns to above the 50 median line. 

Downward channel line: The exchange rate accelerated its decline yesterday and broke through the downward channel line. The exchange rate is currently rebounding during the Asian session. The first target of the rebound is the lower edge of the downward channel line, which is also the purple 13-period moving average. If it continues to break upward, the second target is the upper edge of the downward channel line. 

GBPUSD Pivot Indicator 

(GBPUSD M30 Price Chart, Source: Ultima Markets APP) 

According to Pivot Indicator in Ultima Markets APP, the central price of the day is established at 1.2390, 

Bullish Scenario: Bullish sentiment prevails above 1.2390, first target 1.2420, second target 1.2450; 

Bearish Outlook: In a bearish scenario below 1.2390, first target 1.2320, second target 1.2300.

Conclusion 

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