FX.co ★ GBP/USD: under pressure from Scottish question and in anticipation of data on GDP growth

Bears of the pound-dollar pair could not keep the price in the area of two-month lows, that is, within the 28th figure. Today, buyers tried to take revenge, but corrective growth was rather uncertain. The pair got stuck around 1.2930, drifting in anticipation of tomorrow's data. Almost all fundamental factors now play against the British currency (as well as technical factors, however), so the current price rebound is temporary.

The "civilized" Brexit did not bring the long-awaited relief to GBP/USD traders. On the contrary, uncertainty only increased, and negotiations between London and Brussels are conducted in the language of ultimatums. Johnson threatens to end the dialogue on the conclusion of a trade deal, the Europeans, in turn, promised Madrid to support Spain's territorial claims over Gibraltar. This start of the negotiation process disappointed investors, after which the pound began to slowly but surely slide down. Although certain events still kept the GBP/USD pair afloat. For example, the Bank of England, contrary to numerous rumors, did not lower the interest rate at its January meeting. In addition, the pound received support from UK labor market data. In particular, traders were pleased with the growth rate of salaries, which exceeded the expectations of most experts. But in general, the fundamental background for the pair is bleak. Therefore, tomorrow's release of data on the growth of the British economy can either increase pressure on GBP/USD, or even out the downward momentum - for a while.

According to preliminary forecasts, in the fourth quarter the UK economy grew by only 0.8% on an annualized basis and by 0.1% on a quarterly basis. This is a rather weak result (for example, in annual terms, the indicator last time was at such a low level at the end of 2018). If we talk about the growth of the British economy in December, then a very weak growth is also expected here - only 0.2% on a monthly basis. Data on the growth of industrial production in Britain will also be published tomorrow. Here the forecast is also quite pessimistic: in annual terms, the indicator will remain in the negative area, confirming the slowdown of key economic indicators. Thus, releases can put additional pressure on the pound, increasing the strength of the downward movement. Even if the indicators come out at a forecasted level, the pound still will not be able to take revenge, as the market will again talk about the fact that the English regulator will decide to lower the interest rate at its next - March - meeting.

Let me remind you that in January, the BoE made it clear that it was ready to continue to maintain a wait-and-see attitude, but subject to the restoration of key parameters of the British economy. Recent trends did not go unnoticed - the regulator lowered its forecast for economic growth, while recognizing that inflation would remain below target level until the end of next year. In addition, the central bank excluded the wording that it was ready for "moderate gradual tightening of monetary policy." But at the same time, the alignment of forces among the members of the Committee did not change - only Saunders and Haskel voted for the interest rate cut. On the eve of the January meeting, rumors were circulating in the market that Gertjan Vlieghe and Silvana Tenreyro would join them, voicing the dovish comments. If these rumors were confirmed, four out of nine members of the Committee supported the easing of monetary policy. That is, the decision to lower the rate would depend on one member of the English regulator.

According to a number of experts, tomorrow's data can push the skeptics Vlieghe and Tenreyro to cast their vote in favor of easing monetary policy. In any case, a further slowdown in the British economy will increase the likelihood of such a scenario.

It is also worth noting that the pound is under the background pressure of the "Scottish Question". The first minister of this region of Great Britain, Nicola Sturgeon, announced that Scotland intends to return to the European Union "as an independent nation." She specified that she would continue to seek a second referendum on independence, despite the categorical refusal of London. Let me remind you that in 2014 the Scots refused to leave the UK, but at the same time in 2016 more than 60% of the region's population voted against Brexit. In other words, if a second referendum on independence is held, Scotland will most likely leave Britain and join the EU in the future. Obviously, the prospects for political instability are also putting pressure on the pound.

From a technical point of view, the pair on the daily chart is on the lower line of the Bollinger Bands indicator, under all the lines of the Ichimoku indicator, which also formed a bearish "Parade of Lines" signal. This indicates the potential for further decline. The nearest support level is located quite far - at around 1.2740 (this is the Kijun-sen line on the weekly chart). If tomorrow's numbers come out in the red zone, the pound will be able to test this price target this week - especially if Powell does not put significant pressure on the dollar.