The current fundamental setup paves the ground for further depreciation of the cable. UK GDP growth slowed down from 0.9% to 0.7% in the III quarter. British public dept increased, while retail sales contracted more than expected. October BOE minutes showed no changes in MPC with 7 out of 9 members voting to leave rates unchanged. The data adds to expectations that the Bank of England will wait at least until after the May general election to start raising interest rates.
The long-term bearish resistance remains intact. On the other hand, the pair has already turned oversold. The “hammer” candle on the weekly chart still remains active. Given all that, we could see more consolidation in the $1.6200/5870 range on the coming week.
By Kira Iukhtenko, FBS