A fairly narrow range for the pound sterling has started its formation between the levels of 1.2450 and 1.2500. Even the publication of data in the United States, which turned out to be noticeably better than expected, failed to affect the overall situation. The pound even advanced to the upper limit of this range despite the fact that the US GDP growth rate accelerated from 0.9% to 1.6% on a yearly basis. Notably, mass media usually focuses on quarterly data, which is less significant. Meanwhile, a quarterly report turned out to be well below the forecasts, showing a rise of 1.1% instead of 2.3%. While the GDP data turned out to be mixed, data on the US unemployment claims was definitely better than anticipated. In particular, the number of initial claims decreased by 16 thousand, with a forecast of an increase of 3 thousand. The number of continuing claims was supposed to increase by 10 thousand, but it decreased by 3 thousand.
US GDP Growth Rate:
What is the reason for the market stability? Apparently, investors are unwilling to take risks ahead of upcoming meetings of the largest central banks. Although the Bank of England will hold its meeting only on May 11, the FOMC meeting and the European Central Bank's meetings will take place next week. Since there is no clear understanding of what decisions the regulators will take, traders prefer to remain cautious. This explains the market stability.
The pound sterling is likely to close the week within the sideways channel of 1.2350/1.2550 against the US dollar. The currency has not shown any radical changes. It has a cyclical fluctuation, which allows traders to use a trading strategy based on a rebound.
On the four-hour chart, the RSI indicator is moving in the upper area of 50/70 because the price is hovering in the upper limit of the range.
On the same time frame, the Alligator's MAs have numerous intersections, which corresponds to the current stagnation.
Outlook
The market situation will remain the same until the price settles beyond either limit. Under the existing conditions, a rebound strategy is the main one.
However, special attention should be paid to a breakout strategy as it will lead to significant price changes and indicate a further direction of the price.
In terms of the complex indicator analysis, we see that in the short-term and intraday periods, technical indicators are signaling mixed opportunities because of the flat movement. In the medium-term period, the indicators are pointing to an upward trend.
