UK economy: There is a probability of further loss of pound value

GBPUSD currency pair continues to bearish movements, and there is still no end to the current downtrend. Some members of the British Conservative Party have questioned their leader and prime minister,”Theresa May”. The fifth round of BREXIT talks will begin this week and the two sides have different ideas. The UK’s economic data is also weak and the pair has been able to pass through several support points.

All of these factors indicate a continued weakening of the pound value in the market, especially if the value of the US dollar is strengthened. However, from a technical point of view, the pair seems to have reached the saturation levels. That means we will probably see a corrective bullish market. But what factors can lead to the bullish correction of the currency pair? Efforts to force Theresa to resign from the post of the prime ministery have been useless, and members of the opposition party of Teresa Maid have failed to have enough support from parliament members. From the BREXIT negotiations, there is also a possibility that there will be a significant change in the negotiations, but it is still far from the current situation.

The second factor after the decline of political tensions in the UK is economic reports. Last week, PMI indices in the construction and manufacturing sector were worse than market sentiments. However, in order to confirm the weak indexes of PMI in the construction and manufacturing sector, we should wait for the release of the index of industrial output, the level of production in factories, and the trade balance. If these reports are better than predictions, we will see an improvement in UK interest rates and, consequently, strengthen the pound’s value. However, it should not be too optimistic, in fact, the chance that UK’s economic reports be weak is serious. In fact, any factor that could negatively impact market sentiments will weaken the pound.