GBP/USD: forecast for Dec. 11-15

Last week the British pound managed to touch a 6-month high versus the euro but had worse luck against the US dollar.

There was a bright spot on the Brexit front. Britain and the European Union had struck a deal on Friday that will allow the second phase of talks on the British exit from the EU – the negotiations about trade and transition arrangement. The formal decision will be made at the EU summit, which will take place on Thursday and Friday. This good news, however, didn’t lead to the strengthening of the pound as investors worry that the UK economy is still facing problems.

The Bank of England will meet on Thursday. The central bank is expected to keep interest rates on hold after its rate hike in November. Traders will be looking for any clues over the timing of any future policy tightening in the central bank’s minutes. The latest economic figures from the UK have been mixed: activity in manufacturing sector jumped to more than 4-year high, while service sector growth eased back. The latter is experiencing high inflation. All in all, it’s clear that under the shadow of Brexit, the Bank of England will continue falling behind the Fed. This keeps hurting the pound. 

Other events in the UK economic calendar include CPI on Tuesday, labor market figures on Wednesday and retail sales on Thursday.

GBP/USD stayed indecisive below 1.3500. Support is at 1.3260 and 1.3190. If the pair gets above 1.3500, the next obstacle will be at 1.3630.

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