Forex Opinion & Analysis

Pound Sterling To Remain Rangebound

The British pound has been standing still since Thursday. Even Friday’s data on UK retail sales failed to impact the price. This is primarily due to mixed statistics. Stagnation will probably last as today’s macroeconomic calendar is bereft of important releases.

The United States will only report on durable goods orders. The indicator is forecast to fall by 0.3%, likely as a negative factor. Until now, US macroeconomic statistics, primarily regarding consumer activity, were much better than in Europe.

A decline in durable goods orders indicates a possible decrease in consumer activity and retail sales. However, this indicator is of secondary importance. Thus, a change in durable goods orders has an indirect impact on economic growth and the growth of other consumer industries.

A drop in durable goods orders creates only preconditions for lower consumer activity. Most likely, investors will only take note of this report and wait for retail sales forecasts, while the market situation will remain unchanged.

UK retail sales monthly.

Technical Outlook – GBP/USD

GBP/USD has formed a tight sideways range within a broader one. For the second consecutive week, the quote has been moving between 1.2150 and 1.2320. Currently, the pair is trading around the upper boundary of the range, thus forming another sideways channel. Such price fluctuations indicate uncertainty among market participants, which may lead to continued range-bound trading.GBP/USD hourly price chart.

The RSI indicator drifts along with the 50-day moving average on the 1-hour and 4-hour chart, which also points to the flat market. On the D1 chart, the technical instrument is moving in its lower area of 30/50, which signals a downtrend in the medium term.

Moving averages on the H1 and H4 Alligator intersect, which confirms market stagnation. The D1 Alligator indicates a downtrend as moving averages are pointing down.

Short-term stagnation within the upper boundary of the range may lead to accelerating momentum in the market. Thus, long positions will be relevant if the price consolidates above the 1.2325 mark on the 4-hour chart.

In this case, the pair will break out from the sideways movement. If the price fixes below 1.2250 on the 4-hour chart, it could fail to hit the 1.2200-1.2150 zone.

Complex indicator analysis provides a mixed signal for the short-term and intraday trading due to market stagnation. In the medium term, technical indicators suggest a downtrend.

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