GBPJPY
The UK economy has been experiencing a notable slowdown since the start of 2023, which has worsened over time and culminated in a technical recession during the second half of the year. This economic downturn has been attributed to a range of factors, including a decline in consumer spending, weak business investment, and ongoing uncertainty surrounding Brexit.
The latest GDP data for the fourth quarter revealed a worse-than-expected contraction of 0.3% (quarter-on-quarter), which marked two successive quarters of negative GDP - the definition of a technical recession. The contraction was largely driven by a significant drop in services output, particularly in the retail and hospitality sectors. Additionally, manufacturing output also contracted, reflecting a decline in global demand for UK-produced goods.
The economic slowdown has had significant implications for the UK labor market, with job losses rising and unemployment increasing. The Bank of England has responded to the recession by cutting interest rates to stimulate lending and investment, but the impact of these measures remains to be seen.
Overall, the UK economy is facing a challenging period, and it will likely take time and concerted efforts by policymakers, businesses, and individuals to revive growth and restore confidence.
If the price fails to break above this structural level, there is a great chance that this upward trendline will be compromised. If this trendline is broken we can expect the 23.6 or the .50 levels on the Fib to be retested.
Alternative Scenario:
If we get a break above the level, the safest approach is to wait until the highs are broken with the price closing above it before looking to go long on this position.