By Dmitriy Gurkovskiy, Chief Analyst at RoboForex
The British Pound is starting a new week by moving close to the downside border of the weekly trading range.
The Manufacturing PMI report published last Friday laid the British currency low. The indicator decreased down to 52.8 points in January after being 54.2 points the month before. The report was expected to show some decline, but only down to 53.5 points.
It means that the manufacturing growth in the United Kingdom slowed down more than expected. The actual number is the lowest since July 2016.
This decline may be explained by the strategy of manufacturers, which are trying one way or another to be prepared for the Brexit date, March 29th. It may well be that companies and enterprises are increasing stock of supplies, materials, and resources in anticipation of the United Kingdom’s exiting the European Union, and it influences the indicator.
Meanwhile, there is no new information on the Brexit so far. The European Commission keeps saying that it is not going to revise the Brexit agreement. British policymakers are trying to stay positive and ready to look for a solution. The current political situation in the United Kingdom is rather unique: the Labor party is ready to forget about their controversy and cooperate with the party in power for mutual advantage.
The H1 chart shows the descending tendency, which may be considered as a correction of the previous uptrend. At the moment, the pair is trading to break the support line of the rising channel. In case of successful breakout, the price may reach the retracement of 23.6% and then continue falling towards the support line of the descending channel at 1.3000. If this line is broken as well, the instrument may continue its decline to reach 1.2903 (38.2% Fibonacci retracement) and 1.2840, which is close to the support line of the projected channel. Still, if the pair breaks through the current resistance 1.3118, the first target of a new ascending impulse will be high at 1.3216.
Any predictions contained herein are based on the authors’ particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.