Sterling's Recovery Halted by UK Economic Challenges

The British Pound (GBP) has been on the road to recovery thanks to increased demand for assets with higher risk, but its ability to strengthen further is limited. This limitation is due to the impending slowdown in the United Kingdom's economy, which is being impacted by factors such as fragile economic activities, potential inflationary shocks, and weakening demand.

Even though there has been an improvement in the UK Services PMI, economic data still indicates a contraction as it remains below the critical 50.0 threshold. The UK economy is struggling to mitigate the effects of rising interest rates by the Bank of England (BoE), increasing oil prices, and supply chain disruptions stemming from the Russia-Ukraine conflict.

GBP/USD is struggling to make a comeback as the dollar weakness is helping but the outlook is still bearish. The bearish outlook persists and could potentially drive the price towards the historical level of 1.1800, a level not seen since March 23 of this year. The price from yesterday and today shows a neutral movement waiting for data.

 

Resistance 3	Resistance 2	Resistance 1	Support 1	Support 2	Support 3
1.2400	1.2290	1.2200	1.2110	1.2000	1.1900