The British pound continues to impress with its unwillingness to adjust. In general, it also continues to amaze. For example, if the European currency in the last 2 weeks shows certain signs of flat, that is, it is in a side channel, but at the same time has the possibility of resuming the trend movement (in the short term), then the pound sterling in recent weeks has gone into a much more pronounced flat. Even on a 24-hour timeframe, it is perfectly visible. And all this again against the background of the need to adjust after at least five months of growth. But the markets continue to stubbornly hold open longs for the pound, not allowing it to start falling. We have already talked about British problems (economic and geopolitical) a million times. Traders still do not respond to them. Based on this, we continue to believe that the pound remains extremely overbought and may crash down at any time. That would be very logical. However, the "speculative" factor and the factor of new trillion-dollar injections into the US economy can again save the pound from falling. Thus, even taking into account a whole list of factors in favor of the fall of the pound/dollar pair, the upward trend may well resume in 2021.
As for macroeconomic statistics, they remain "average" in the UK. In the United States, the recovery and improvement in macroeconomic indicators are visible. In Britain, nothing like this is observed. The head of the Bank of England, Andrew Bailey, last week said that by the end of the first quarter of 2021, British GDP will shrink. Therefore, it hardly makes sense now to compare the American economy, which is growing at a high rate, and the British economy, which is stalling. Last week, by the way, the Bank of England also held a meeting, during which the regulator did not give any signals about a change in monetary policy. Thus, by the new trading week, the pound/dollar pair is in limbo, and the markets do not know what to do now.
Next week, no important macroeconomic statistics will be published on Monday. The data will start arriving on Tuesday. In the UK, the unemployment rate for January will be published on this day, which, according to experts, will remain unchanged at 5.1%. However, do not let these figures mislead market participants. In the United States, the unemployment rate is now higher, but at the same time, it is in the Foggy Albion that they are waiting for a surge in unemployment in 2021. The fact is that business in Britain is now supported by government programs. As soon as the support ends (and it is planned to be completed in the fall of 2021), many companies will inevitably begin to reduce staff, as the pandemic and Brexit will not be able to leave a mark on the economy. Also on this day, data on the number of new applications for unemployment benefits and changes in average earnings will be published. On Wednesday, Britain will also release a fairly important report – on inflation. Recall that the Bank of England is also aiming for 2% inflation, but so far can only expect an acceleration to 0.8% in annual terms. Core inflation (excluding food and energy) may reach 1.4% y/y, which is still below the target value. Also on this day, business activity indices for the service and manufacturing sectors will be published. At the same time, not only in the UK but also in the European Union and the United States. According to experts, in Britain, all three indices (including the composite) will be more than 50.0, although last month 2 out of 3 indices were below this mark. Thus, it will be possible to state that the British economy is still slowly reviving in the spring of 2021. In the European Union, the business activity index for the services sector may again be below the level of 50.0, showing no recovery. Not surprising, given that many EU countries are on the verge of introducing a third "lockdown". In the United States, with business activity in all areas, for obvious reasons, everything is fine, but on this day a report on orders for durable goods will also be published, the growth rates of which may significantly decrease compared to the previous period. However, the main thing is that there is growth. On Thursday, the United States will publish another estimate of GDP for the fourth quarter of 2020, which is unlikely to surprise anyone, and on Friday - secondary indicators of changes in personal income and spending of Americans, as well as the index of personal consumption expenditures. These reports can only trigger a reaction if the actual values are very different from the forecast values. In Britain, on this day, retail sales for February will be known, which may begin to recover after a disastrous January.
In general, we can say the following about macroeconomic statistics: do not expect that every report will be worked out by the markets. As we have already said, there are a lot of factors now, and statistics are still being worked out selectively. So, don't be surprised if most of the reports are ignored by the markets. We believe that now we still need to pay more attention to technical analysis, which most quickly responds to changes and shows the current picture of the situation. In the long term, we would not make forecasts for the pound, as the pair still cannot even adjust normally. This means that the market laws are not yet being implemented and the pair can be thrown in any direction.
