The British currency was in disgrace, due to a series of disappointing statistics on the United Kingdom and the "pigeon" rhetoric of the Bank of England representatives. The market actively exaggerated talks that the December rally in the pound was excessive, that all the good news is already embedded in the quotes, and that the weakness of the British economy will force the BoE to reduce the interest rate. This caused the chances of monetary policy easing in the UK to increase to 70% at the end of January. However, as soon as this positivity appeared, the pound wiped the nose of the skeptics.

Analysts at the Deutsche Bank predicted that the Bank of England would lower the interest rate not only in January, but also in March, and then reanimate the program of quantitative easing (QE). On the other hand, experts at the Bank of New York Mellon and Nomura argued that at the end of the month, the BoE will refrain from active actions, and the disappointment of the "bears" will result in the growth of the GBP/USD exchange rate.

The strongest increase in the British employment since January 2019 (by 208 thousand) was the catalyst of GBP/USD's rise above 1.31.

Based on fundamental analysis, it seems that the pound, which has missed the economic calendar, is once again becoming the most predictable currency. It flies like a rock in response to disappointing statistics, and takes off like a rocket in response to positive data.

Meanwhile, the increase of speculative "bullish" pound positions in the futures market up to the maximum value since April 2018 indicates that hedge funds and asset managers are using negative to form "longs".

It should be noted that the latest data on inflation, retail sales and the UK labor market reflect last year's picture. Business activity, on the other hand, is a leading indicator, and its growth will reduce the chances of the BoE cutting the interest rate, and allow the GBP/USD pair to continue its movement upwards.

According to forecasts, in January, the British manufacturing PMI will accelerate to 48.8 points from 47.5 points recorded in December. At the same time, the composite index will rise above the critical mark of 50 for the first time in three months, and will reach 50.7 points.

If these indicators turn out to be even better, then the "bulls" for GBP/USD will be able to reduce quotes to the resistance at 1.3220–1.3225. However, if statistics turn out to be disappointing, the quotes will be sent to the lower limit of the medium-term trading range of 1.3000-1.3350.

Investors also need to keep in mind the potential conflict between the United Kingdom and the United States over the digital tax. Washington is threatening to impose duties on exports of goods and services from the UK, whose share in total deliveries reaches almost 20%.