While inflation in the United States has come down, it hasn't helped the pound. It was expected that the growth rate of consumer prices will slow down from 8.5% to 8.2%, which will be the reason for the revision of the Federal Reserve's interest rate hike, in the direction of their slower growth. But it is precisely the expectation of a strong rise in interest rates in the United States that is the main driving force behind the dollar's growth. And a slowdown in inflation could cause a revision of these expectations, which should have led to a noticeable weakening of the US currency. However, inflation slowed down to only 8.3%. And it is too early to say that the Fed will reconsider the current pace of monetary tightening. As a result, the pound literally collapsed. But not only because of inflation, but also for purely internal reasons. The state of the British economy is causing more and more concern. At the moment, there is active talk in the United Kingdom about the extremely high risk of mass bankruptcy of ordinary citizens, due to a sharp increase in utility bills. According to the latest estimates, published just yesterday, by the end of this year, about one and a half million Brits may be below the poverty line. And such forecasts in no way contribute to the growth of optimism regarding the prospects for the British economy. And then the pound.
Inflation (United States):
The situation for the pound is further aggravated by the data on GDP for the first quarter, the growth rate of which, although increased from 6.6% to 8.7%, still disappointed investors. Economic growth was expected to accelerate to as much as 9.0%. At the same time, there is no doubt that economic growth will slow down sharply in the second quarter. And since now it is growing more slowly than forecasts, the results of the second quarter may turn out to be completely terrifying.
Change in GDP (UK):
Nevertheless, one should not write off such a simple fact as the pound being obviously oversold. The overall decline is quite impressive, and the market clearly needs to somehow correct the resulting imbalance. The reason may be the data on applications for unemployment claims in the United States, which should show, albeit not significant, nonetheless an increase. Thus, the number of initial applications should increase by 5,000.
Application for unemployment benefits (United States):
Data on producer prices, whose growth rates may slow down from 11.2% to 11.0%, will not affect the situation in any way. As a matter of fact, they will repeat yesterday's data on inflation, which the market has already taken into account.
Producer Price Index (United States):
The GBPUSD currency pair, after a short stagnation, resumed its downward movement. This led to the breakdown of the support level of 1.2250 as a result of the prolongation of the medium-term downward trend.
The RSI H4 technical instrument is moving in the lower area of the 30/50 indicator. This move indicates a high interest in short positions. RSI D1 is moving in the oversold zone, which corresponds to the inertial move.
The MA moving lines on the Alligator H4 indicator have a downward direction, despite the stagnation stage. There is no entanglement between the MA lines.
Expectations and prospects:
Keeping the price below the level of 1.2250 in the future will bring the quote to the main support point in the form of a psychological level of 1.2000. At the same time, the oversold status that emerged in the short term allows for a local pullback in the market.
Complex indicator analysis has a variable signal in the short-term and intraday periods due to the flat. Indicators in the medium term give a sell signal due to a downward trend.
*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.
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