GBP / USD hit a fresh three-day low today. The US dollar and the fundamental background around the British currency are under pressure on the currency pair.
The dollar is strengthening on Tuesday due to increased investor interest in traditional defensive assets. Fears are growing in the market regarding the rapid spread of the new virus strain. Additional support for the dollar is provided by fears associated with the implementation of a new stimulus program in the United States. Republicans do not support the Democratic initiative. Inter-party negotiations may drag on.
In the UK, the epidemiological situation remains challenging despite a slowdown in the spread of the virus. According to the latest data, the number of newly detected cases of infection per day decreased to a minimum in mid-December. But it should not be ruled out that the decrease in the indicator may be due to the weekend. As a rule, these days there is always a decrease in the number of detected cases of infection.
Labor market data were released in the UK today. The main indicators came out better than market expectations. The unemployment rate for the month increased from 4.9% to 5.0% (forecast 5.1%). In December, the number of applications for unemployment benefits increased by only 7 thousand, against 38.1 thousand in the last month (forecast +35.0 thousand) The average wage level increased from 2.8% to 3.6% ( forecast + 2.9%).
The bearish signals still prevail on the chart. The currency pair is approaching 1.3600. This is an average level in terms of strength, but a rollback movement can be expected from it. The bearish scenario remains the priority in the medium term.
The main scenario is a decline to 1.3600 and a pullback to 1.3700.
An alternative scenario is a breakdown of support at 1.3600 and a decline in the direction of 1.3465.
The current fundamental outlook is negative. We consider shorts on a pullback to 13690.
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