By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
The British Pound against the USD is starting another January week under pressure: the pair is trading below 1.3000.
The Pound’s major problem right now is the anticipation of the Brexit. Everything is ready and the United Kingdom may start the procedure of exiting the European Union at any moment before January 31st. however, London decided to wait for the exact date.
The statistics published last week showed that the Retail Sales in the United Kingdom lost 0.6% m/m in December after reducing by 0.8% in the previous month. Consumers can’t or don’t want to increase their expenses before the country starts the exiting procedure. It’s another signal that the country’s economy is looking pretty weak and the Bank of England may have to decide on helping it much earlier than the regulator planned based on its conservative approach.
This week, there will be some interesting numbers on the British labor market in November. Most likely, the Average Earnings Index hasn’t increased since November 2019 and that’s bad news for the Pound.
As we can see in the H4 chart, GBP/USD is moving downwards; it is forming the fifth wave with the target at 1.2885. Possibly, today the pair may consolidate around 1.3000. Later, the market may break this range to the downside and then continue falling to reach the above-mentioned target. After that, the instrument may form a new ascending structure towards 1.3100. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving downwards. After the line breaks 0, the price may boost its decline.
In the H1 chart, GBP/USD is forming another descending wave towards 1.2930. After reaching it, the instrument may start a new correction to return to 1.3000 and then resume trading downwards with the target at 1.2885. Later, the market may form one more structure to the upside to reach 1.3050. From the technical point of view, this scenario is confirmed by Stochastic Oscillator: its signal line is moving below 50, thus indicating a strong descending tendency.
Any predictions contained herein are based on the authors' particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.