Yuri Papshev
Independent Analyst
Today, the dollar is strengthening throughout the currency market. This is partly due, in our opinion, to the fixation of a part of the many short positions on it at the end of the trading week and month. At the same time, the dollar's volatility may accelerate today ahead of the Fed's meeting next week.
Disputes of market participants mainly go around the prospects of its monetary policy. Economists are predicting a 25 basis point hike in the Fed's interest rate to 5.25%, before Fed officials pause because of the risks of increased pressure on the banking sector and the economy as a whole, to move towards monetary easing by the end of the year.
From the Central Bank of Great Britain, market participants are waiting for another increase in interest rates. Its meeting will take place on May 11, and most economists believe that the cycle of interest rate hikes by the Bank of England has not yet been completed.
The British pound is supported by the recently published inflation data for March. Thus, the consumer price index CPI amounted to 10.1% (in annual terms), which is higher than the forecast of 9.8% and the psychological mark of 10.0%. In the context of continued high inflation, the Bank of England at its meeting on May 11 will still have to raise the interest rate (some economists believe that at once by 0.50%, to 4.75%). Otherwise, inflation will continue at very high levels, hurting consumer demand and confidence and, ultimately, the economy.
Important macro statistics for the UK will now appear no earlier than Tuesday, when data on house prices in the country and an updated PMI in the manufacturing sector will be published.
From a technical point of view, the GBP/USD pair is developing an upward correction, moving towards the key resistance levels of 1.2670, 1.2830, separating the long-term bull market from the bear market.
In global terms, below the resistance level of 1.4400 GBP/USD remains in the bear market zone, although it is possible that the pair will still reach the zone of key resistance levels of 1.2670, 1.2830. Will it be able to overcome them, given the difficult foreign policy and domestic economic conditions in the UK?
Support levels: 1.2451 1.2440 1.2400 1.2365 1.2315 1.2235 1.2195 1.2100 1.2070 1.2000 1.1920 1.1900 1.1800 1.1160 1.09 40.
Resistance levels: 1.2475, 1.2500, 1.2525, 1.2600, 1.2670, 1.2700, 1.2800, 1.2830.
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