FX.co ★ Hot forecast for GBP/USD on February 19, 2024

What could have gone wrong on Friday? An exceptionally large divergence between expectations and actual U.S. data. The Producer Price Index increased 0.9%, against forecasts of 0.8%, after climbing 1.0% in December. This report did not show any remarkable changes and couldn't have had a significant impact on market sentiment. On the other hand, the construction data, which contracted by 14.8%, was completely surprising. It doesn't matter that market players were expecting a 0.9% growth. The fact that construction volumes showed such a sharp decline was actually quite notable, so the dollar immediately started to lose its positions. Although there were no crucial changes. In general, the pound continues to remain around the values it traded at throughout the past week. Today, the US and Canadian markets are closed for a holiday.

Last week, the volume of short positions fell around the local low of December 2023, which is within the range of 1.2500/1.2530. As a result, there was a rebound, and the pound climbed back above the level of 1.2600.

On the four-hour chart, the RSI upwardly crossed the 50 middle line. This indicates an increase in the volume of long positions in the British pound.

Meanwhile, the Alligator's MAs are intertwined in the 4-hour chart, indicating a slowdown in the downward cycle.

Outlook

Keeping the price above the level of 1.2600 could strengthen the British pound. In this case, the pair could go back to trading around the range of 1.2600/1.2700/1.2800. The bearish scenario will come into play if the price settles below the level of 1.2600. This could increase the bears' chances of starting another attempt to break through the support area of 1.2500/1.2530.

The complex indicator analysis suggests that the pound may recover in the short-term and intraday periods.