The week was positive for the greenback. The US dollar index managed to set new highs near $93.50.
GBP/USD: forecast for Dec. 18-22
After declining to 1.33, GBP/USD managed to return above 1.3400.
The highlight of the week was the meeting of the Bank of England. The regulator said that despite above-target inflation and progress in Brexit talks it would raise interest rates only gradually. Some traders expected something more hawkish from the central bank and got disappointed.
British Prime Minister Theresa May was defeated in parliament over Brexit: the lawmakers voted to hand themselves more say over a final exit deal with the EU. This may complicate Brexit. Yet, for now the market is not considering this as a great risk.
On the bright side, retail sales which rose 1.1% in November, 3 times more than expected. In the coming days, the UK will release public sector net borrowing, final GDP and current account. A formal agreement between Britain and the European Union is needed to lift the pound higher. Economic news from the United States will also have an impact on GBP/USD in the coming days.
Technically the pair is struggling to make a decisive move above the resistance line, which has been in place since 2014. A significant obstacle is found in the 0.3500 area. A fix above this level may open the way to 1.3630.
This is Forex trading plan for Thursday, May 24…
It seems like the rally of the greenback has ended. On Monday, the US dollar index tested levels near $94, however, closed below $93.50.
Last week was highly positive for the US dollar, so, it managed to end the Friday’s trading above 93.50.