POUND STERLING ANALYSIS & TALKING POINTS

• UK housing prices strengthen slightly since November.
• Muted day expected final trading day of 2023 may provide some volatility.
• GBP/USD eyes rising wedge break.

GBPUSD FUNDAMENTAL BACKDROP

The British pound found some support this Friday, the final trading day of 2023. UK housing price data (see economic calendar below) showed little change from the November read, albeit a marginal improvement. Coupled with a weaker than expected US initial jobless claims print yesterday, cable remains bid as the greenback opened lower today. The overarching narrative of interest rate cuts and a pivot from the Federal Reserve has not changed since last week and will likely continue into the first week of 2024 ahead of some key US economic data including ISM manufacturing PMI’s , FOMC minutes and Non-Farm Payrolls (NFP) .

GBP / USD ECONOMIC CALENDAR (GMT +02:00)

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

GBP/USD DAILY CHART

Chart prepared by Warren Venketas , IG

GBP/USD price action is more interesting than and contains several technical indications. Short-term there is a forming rising wedge (dashed black line) although the wedge is not typical in its positioning (downtrend), a break below wedge support could see the pattern unfold as per normal. The Relative Strength Index (RSI) is declining off overbought levels with corresponding prices ticking higher, reflecting bearish/negative divergence that could suggest subsequent downside to come. Bulls are also approaching long-term symmetrical triangle resistance (black) around the swing high which does not rule out further upside.

• 1.2900
• Triangle resistance
• 1.2848
• Wedge resistance

• 1.2764
• Wedge support
• 1.2613

MIXED IG CLIENT SENTIMENT (GBP/USD)

IG Client Sentiment Data (IGCS) shows retail traders are currently net SHORT on GBP/USD with of traders holding SHORT positions (as of this writing).