Last week, GBP/USD was the most prominent for the traders of Forex currencies, as the pair of sterling currencies jumped against the dollar towards the resistance level 1.2794 higher for the currency pair for more than three months. The trading of the exciting week's stable week closed the level of 1.2677 performance, awaiting the reaction of investors to the international central banks and a package of important British and American economic data this week. Recently, the Bank of England had kept interest rates at the highest level in 15 years. Therefore, adhering to its message that borrowing costs will remain high for some time despite the increasing bets on the wave of discounts in 2024. For his part, the Governor of the Bank of England Andrew Billy said in a statement issued in addition to the decision: “There is still a long way to cut it” in the battle to control inflation.
Meanwhile, the British economy contracted more than expected in October, influenced by rising borrowing costs and wet weather, paving the way for the last quarter of the recession, widely expected to continue until 2024. Furthermore, With the full impact of the Bank of England's interest rate hikes yet to be felt, the economy is expected to achieve modest gains in the fourth quarter, with some expecting the start of a shallow recession.
On the other hand, The GFK Consumer Confidence in Britain has risen to -22 in December, from -24 in November, which represents a remarkable improvement in October reading and indicates that the trend is founding. Clearly, the main number is close to the highest level in two years (-21). Commenting on the numbers. Gabriella Dickens, UK's chief economist in Pantheon for a macroeconomic economy, says "The continuous recovery in consumer confidence adds weights to our view that the spending of families will partially recover in the fourth quarter, supported by an increase in real wages".
Moreover, GfK adds that the improvement in consumer confidence in the United Kingdom is driven by improved expectations for the next year for both the economy (-25, up from -26) and personal finances (-2, from -3).
Also, Pantheon Macroeconomics states that the overall value of cost-of-living payments for households will rise to 1.2% of total disposable income in the fourth quarter, up from 0.3% in the third quarter. Additionally, Pantheon expects a 1.5% year-on-year increase in real household disposable income in 2024, with average weekly wage growth continuing to outpace Consumer Prices Index inflation. Furthermore, Cost-of-living payments will stop after the first quarter, but benefits payments will increase by 6.7% in April. Finally, the main rate of National Insurance contributions will drop by 2 percentage points in January.
Generally, the Budget Responsibility Office estimates that the changes in tax rates and advantages will collectively work to enhance the available income by 0.6% in 2024/2025. Shortly, Pantheon added that pressure on GDP growth on a quarterly basis of mortgage re -financing will decline to about 0.1 percentage points in 2024, from 0.2 percentage points this year.
GBPUSD Expectations and Analysis Today:
GBP/USD expectations indicate that the trend may be upward if it returns to stabilize above the resistance of 1.2700. According to the performance on the daily chart below, moving towards the resistance of 1.2850 will be important for the stronger bull move towards the psychological resistance of 1.3000 successively. On the other hand, during the same time period, the return of the GBP/USD price towards the support level of 1.2545 will be important to control bearish forces on the trend again and dissipate the current upward hopes.
Today's economic calendar is devoid of important British and American economic releases. Thus, investor sentiment in global markets will react to the performance of the British Pound until the results of important economic data are received in the remaining days of the week.
Ready to trade our daily Forex analysis? We’ve made this UK forex brokers list for you to check out.