Throughout this week's trading, the pound has shown notable resilience against the dollar's gains against other major currencies since the release of stronger-than-expected US jobs numbers. Currently, GBP/USD pair’s price is stabilizing around the 1.2740 level at the time of writing, and its highest level this week was the 1.2765 resistance level. Obviously, the outlook for the pound against the dollar and the euro largely depends on the health of global stock markets, with rising equities proving supportive.
In general, analysts at Goldman Sachs say they prefer the pound as long as stock markets remain buoyant. They said, "Most importantly, the pound is a unique currency that tends to do particularly well in an environment of moderate volatility and booming equity prices." Relatively, stock markets have been uninspired during the first half of this week, and how they move in the wake of today's US inflation number could determine how the pound ends this week's trading.
On the front of other relevant British data, the release of UK GDP on Friday is important because it could confirm that the economy gained some momentum at the end of the year. Meanwhile, the market expects 0.2% on a monthly basis in November, while the annual rate is expected to be 0.1%. Also, the three-month rolling figure is expected to be -0.1%. So, if the data beats expectations, the pound could move higher, but disappointments could send the pound lower.
Overall, the GBP/USD exchange rate lost momentum and slid below 1.27, which is not entirely in line with next week's update which warned of significant resistance levels located around 1.28.
During statements yesterday, The Bank of England Governor Bailey told MPs he was concerned private credit, which has grown dramatically over a decade of low rates and is located in the less regulated non-banking sector, was worryingly “opaque”. He added, “It is very high on the list of issues to work on and monitor carefully, because we see developments in the market that make us want to understand more about it,” Bailey ended, “It lends to the people who are being taken advantage of.” This is the point, so the risk clearly exists. “
In contrast, households and businesses remain stable as officials have eased concerns about debt in both the mortgage market and among businesses. He added, "We have not seen a clear increase in unemployment. Moreover, this is appropriate because one of the drivers of loan losses, especially in the mortgage market, is unemployment." He added that the mortgage market, "is nowhere near as it was during the global financial crisis" and that "the same is true for small businesses."
GBPUSD Expectations and Analysis Today:
According to the performance on the daily chart above, the price of the British pound against the US dollar “GBP/USD” still on an upward path. Therefore, the stability above the 1.2760 resistance supports this. Moreover, if the US inflation numbers come in lower than expectations, the bulls may find an opportunity for further upward movement. Technically, the next resistance levels will be the most important 1.2800 and 1.2885, respectively, and the last level is important for anticipating psychological resistance 1.3000. On the other hand, if the US inflation numbers are stronger than expectations, the GBP/USD pair may be exposed to profit-taking selling operations and breaking the support level of 1.2670 will be possible.
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