The British pound lost 71 points yesterday due to disappointing UK economic data. Industrial production shrank by -1.2% in November against expectations of -0.1%, November GDP fell by 0.3% against the forecast of 0.0%. NIESR’s UK GDP forecast for December was 0.0%. There have even been rumors in the market that the Bank of England may lower the rate as early as January 30 if key indicators continue to be weak in the future.
The price reached its closest target at the Fibonacci level of 161.8% on the daily chart (1.2968), but the gap has not been closed since the opening of the week. Today, the market will have such an opportunity – to close the gap, since important British inflationary data will be released only tomorrow, and today flat data are expected for the US CPI – the forecast for the base CPI is 2.3% y/y – unchanged.
On the H4 chart, the Marlin oscillator did not form a strong convergence. The upward movement may be short-term, the target 1.3057 is the low to close the opening gap of the week, after which we expect the pound to fall further with targets at 1.2820 and 1.2730 (Fibonacci levels on daily).
In a slightly more distant future, until the end of the month, we are waiting for the pound to decline to the price of 1.2661 – here the Fibonacci reaction level of 138.2% converges on the weekly chart, the MACD line, the low of August 15, 2018.