At the end of the week, the British currency managed to surprise experts, showing an unexpected reaction to the current macroeconomic data in the country. Previously, the pound either ignored such news or showed a weak reaction to them. However, this time everything turned out differently, analysts emphasized.
For a long time, the dynamics of the sterling depended solely on news related to the British exit from the European Union and did not pay much attention to the "smaller" factors. And at the moment, macroeconomic data came first for the pound quotes. Experts say such a reaction may be due to the coincidence and sequence of two important events, namely, the release of macro statistics and then the adoption of the Brexit bill.
Recall, that on the evening of January 22, a document was approved in the House of Lords of the British Parliament that regulates Britain's exit from the EU. Its signing will be the first step towards the divergence of Foggy Albion and the countries of the Euroblock. It is expected that on January 31 this year, the country will leave the EU, as planned. The transition period will begin on February 1, and this adaptation will last until the end of this year. Throughout 2020, the UK will comply with the laws of the Euroblock until a new free trade agreement is concluded with the remaining 27 EU countries.
The current situation provided significant support to the British currency, the pound that had previously fallen, perked up. And on Wednesday, the quotes fell to 1.3143 and subsequently remained at that level.
According to analysts, the key resistance level for the pair GBP/USD was the mark of 1.3128. On Thursday, January 23, the tandem cruised near this bar adding 1 point to 1.3129.
Furthermore, the sterling managed to rise to 1.3139–1.3140, and in this range, the GBP/USD pair continues to run.
Finding itself dependent on economic reports, the British currency baffled market participants. On Tuesday, the pound gained 0.7% against the greenback after the publication of the report of the Confederation of British Industry. Current data regarding business optimism exceeded experts' forecasts, which allowed sterling to move up. For some time, the risks associated with Brexit were secondary, and investors focused on the upcoming meeting of the Bank of England. At the moment, experts estimate the probability of a decrease in the interest rate of less than 50% compared with 70% that was recorded last week.
The current situation instills vigor in the currency of Foggy Albion. According to analysts, the "British pound" has already won back the losses incurred since January 9, 2020. Recall that at that time Mark Carney, Governor of the Bank of England, made it clear that the likelihood of a reduction in the key rate is still valid. Currently, this threat has passed but not to the end, as the economic growth in the UK which has suffered from problems with Brexit remains low by European standards.
According to experts, this week the pound has clearly demonstrated its contradictory nature. Its violent reaction to statistics even slightly exceeded the response to the Brexit bill. Experts believe that in the near future, the British currency can present no less interesting surprises related to the current economic and political situation.
