Buyers continue to hold the initiative, and on Wednesday GBP/USD is steadily recovering towards 1.1500. Nevertheless political uncertainty in Britain and also weak economic statistics do not allow predicting a long-term strengthening of sterling.
The British media announced the appointment of Rishi Sunak as the Prime Minister. The new head of the Cabinet will be responsible for solving long-standing political and economic problems, which Liz Truss failed to cope with. According to Rishi Sunak, the country is experiencing a deep recession caused by the COVID-19 pandemic and the deepening energy crisis in Europe.
Most experts believe that in the near future sterling will return to the downward trend. At the beginning of the week the British Business Activity Indexes came out. Manufacturing index decreased from 48.4 to 45.8 ppts and services from 50.0 to 47.5 ppts.
GBP/USD Technical analysis
On the daily chart the Bollinger indicator has already returned to moderate growth.
MACD indicator has crossed the zero line upwards from below, has entered the positive area and holds a buy signal.
The stochastic oscillator on the rise broke through the 80% level and entered the overbought area.
If the pair gains above 1.1500, we consider entering long positions with Take Profit at 1.1700. We will set a stop loss at 1.1400.
On a rebound from 1.1500 we wait for breakdown of support at 1.1300 and after the price has consolidated, we open sales with Take Profit at 1.1060. Stop-loss is set at 1.1450.
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