Global financial tensions begin to ease

In light of the most recent developments in the world's money and capital markets, UBS has agreed to pay 3 billion Swiss francs ($3.23 billion) for a share in rival bank Credit Suisse, accepting losses of up to 5 billion francs ($5.4 billion) in a merger assisted by Swiss authorities. Simultaneously, Credit Suisse is receiving assistance from global central banks such as the US Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank. This support is provided as part of the USD Swap line, a facility that provides liquidity through the US dollar during periods of high market tension and is set to start on Monday and last at least through the end of April.

While both Swiss banks with a presence in London, a major financial center, are regulated by the Financial Conduct Authority (FCA) and the Bank of England's Prudential Regulation Authority (PRA), the UK has been urged to support and coordinate the merger as soon as possible in order to support financial stability and avoid domestic impact, while the BoE continues to assert that the UK banking system has sufficient capital and liquidity.

In terms of economic data impacting the pound and the dollar this week, inflation expectations for February decreased to 3.9% from 4.8% in January, the lowest level in five months. Meanwhile, the YoY Consumer Price Index (CPI) for February in the United Kingdom, which is due for release on Wednesday afternoon, is predicted to dip to 9.8% from 10.1% in January.

Experts predict that the BoE will keep interest rates at their current levels of 4% if the impact of the global banking sector tightens and inflation softens, or they may climb by 25 basis points to 4.25% if the situation eases and the consumer price index rises. Some observers predict that the Fed will continue raising interest rates by 25 basis points this week due to the fact that US inflation is still a significant concern for the Fed at the moment. As a result, it is anticipated that the pound tends to stabilize and decline slightly against the dollar during this period.

Data for Technical Analysis (5H) CFD GBP/USD

Resistance : 1.2209, 1.2217, 1.2230

Support : 1.2181, 1.2173, 1.2160                  

5H Outlook

1H Outlook

Source: Investing.com                                

Buy/Long 1 If the support at the price range 1.2171 - 1.2181 is touched, but the support at 1.2181 cannot be broken, the TP may be set around 1.2212 and the SL around 1.2166, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1.2209 - 1.2219, TP may be set around 1.2225 and SL around 1.2178, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1.2209 - 1.2219 is touched, but the resistance 1.2209 cannot be broken, the TP may be set around 1.2177 and the SL around 1.2224, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1.2171 - 1.2181, TP may be set around 1.2163 and SL around 1.2211, or up to the risk appetite.       

Pivot Points Mar 20, 2023 05:51AM GMT

Sources: Investing 1, Investing 2