The uptrend, formed in August last year, continues, although its intensity is weak nowadays. Moreover, despite all the negative factors for the pound, a situation in favor of risky assets is developing on the market, which allows the Pound to successfully resist the JPY. We believe that the situation will not change in the near future, and the uptrend will recover.
After a wave of negativity last week, the market is again becoming optimistic, waiting for the signing of the first phase of the trade deal between the US and China. Another step towards China has already been taken: China has been excluded from the list of countries that manipulate their currency. Overall, this week tensions are decreasing, given the reduced likelihood of a military conflict between the USA and Iran.
Disappointing data on the British economy released on Monday put pressure on the GBP. As it became known, the GDP in November decreased by 0.3%, which is the worst indicator since 2012. Industrial production output is also rapidly decreasing. It should be noted that these indicators were achieved during the period of uncertainty about Brexit, which gives us reason to expect an improvement in the economic situation in the UK this year. However, the Bank of England, in this situation, is likely to be forced to ease monetary policy to stimulate the economy.
Most technical analysis tools are neutral, but focusing on fundamental processes that affect investors' interest in safe assets, we believe that the deals to BUY will be most effective in the medium term.
