According to the analytics from IronTrade, it is probably not an excellent time for GBP now. However, the course taken by the United Kingdom’s political leaders helps ease tensions in society and opens up opportunities to support the economy. It is still disputable whether these measures are effective in the energy crisis.
Fundamental arguments
From the fundamental point of view, current natural gas prices seriously affect industrial production, which suffers enormous losses. Even the service industry loses its attractiveness since there is no access to cheap resources and products.
Technical arguments
Technically, the GBP looks somewhat overvalued amid the falling profitability of industries and still expensive energy resources. It maintains a falling medium-term trend.
Big traders analysis
Picture 1. The price chart of GBPUSD and the indicator of big traders for the period 29.12.2021 – 24.01.2022. The chart is presented by Irontrade.com.
As we can see from picture 1, the GBP continues to fall despite increasing demand. This peculiarity is caused by the fact that the producer requires significant cash injections to stay afloat and the delayed effect of the pandemic mitigation policy on the population. As a result, the volume of fresh money supply levels out the growth in demand and saps the currency’s value.
Forecast
We expect the DOWNWARDS movement of this asset. It is indicated by a fundamental set of factors. The growth of demand should significantly exceed current levels to break the trend. However, it should be noted that a decrease in the volume of “helicopter” money due to lockdown will be a positive factor and soften the falling dynamics.
We recommend using RSI (21) for better control over your positions. RSI helps to identify the “overbought” and “oversold” levels for the instrument and indicates overall market sentiment.
We recommend keeping 3 trades DOWN and 2 trades UP simultaneously.
Try to implement this strategy on IronTrade.com. It is convenient and easy to limit risks there, receiving high profitability. Good luck.
