British Pound Challenging New Reality: GBPUSD $GBPUSD forex FX TradingOpportunity
Firstly, mind inflation. In January, it reached 5.5%, growing since December. Normally, the Bank of England prefers staying away from inflation processes, letting the economy get back to balance on its own. However, in this case, the growth of prices for energy carriers and food will keep the CPI high, resulting in a decline in the economy. The CB will have to interfere to bring inflation back to 2-4% with the previous target level of 2%.
Businesses need a clearer understanding of what is going on, and the broader the horizons, the better. The Bank of England gave some information on the meeting on 17 March. The interest rate grew to 0.75%. Inflation is indeed too high to leave in unattended. However, the position of the BoE is less aggressive than one would expect.
The currency market is trying to avoid risks. This makes the USD popular and puts serious pressure on other currencies, including the pound. No changes in the moods are expected anywhere soon.GBP/USD continues falling. On W1, a reversal inverted Head and Shoulders pattern keeps forming. The right shoulder is at 1.1950, so in the long run this will be an aim for a test.
Currently, we should expect a minor bullish correction to the broken border of the descending channel at 1.3180. From this level, the price is likely to bounce downwards and continue falling by the width of the channel.
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