GBP remains balanced. Overview for 12.01.2023

Yesterday the GBP/USD traded higher and closed the day in the positive territory around $1.2210. Today it was trading in a narrow range of $1.2190-30, staying close to a 4-week high. On the hourly chart, the GBP/USD is still trading above the MA (200) H1 moving average line ($1.2080). The situation is similar on the four-hour chart. Based on the foregoing, it is probably worth sticking to the north direction in trading, and as long as the GBP/USD remains above MA 200 H1, it may be necessary to look for entry points to buy for the formation of a correction.

According to BRC, retail sales in Britain in December grew by 6.5% y/y. This is higher than forecast and higher than in November. Of course, the time of Christmas sales matters. Yet the situation is good all in all.

Curiously, the pound does not react to the weakening of the USD too actively. If the market were normal, the pound would grow significantly, but now is different. Investors are worried by inflation and future steps of the Bank of England concerning the increase in the interest rate.

In addition, politicians have not yet returned to the issue of Northern Ireland inside the Brexit agreement. Supply chains issues persist. All this complicated the situation for the pound at the moment and in the long run.