No Result
View All Result
Markets
EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD XAU/USD
Central Banks
FED ECB BoE BoC BoJ SNB RBA RBNZ
Brokers
Wire Transfer Visa/Mastercard Paypal Fasapay Skrill Bitcoin
FCA Cysec CFTC NFA FSA
Forex Guide
Beginners Basics Technicals Fundamentals
Education
Forex Articles Forex School Forex Terms
Forex Strategies
5 Minutes 15 Minutes 30 Minutes 1 Hours 4 Hours Daily
Resources
Indicators Forex Ebooks MT4 MT5
Trading Tools
Live Charts Economic Calendar Fibonacci Calc Pivot Points
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
    • Ebooks
    • Indicators
      • MT4 Indicators
      • MT5 Indicators
  • Brokers
    • Deposit Bonuses
    • No-Deposit
    • Demo Contest
    • Live Contest
    • Brokers News
  • Tools
  • Login
  • Deposit Bonuses
  • No-Deposit Bonuses
  • Demo Contest
  • Live Contest
  • Brokers News
  • Brokers
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
    • Ebooks
    • Indicators
      • MT4 Indicators
      • MT5 Indicators
  • Brokers
    • Deposit Bonuses
    • No-Deposit
    • Demo Contest
    • Live Contest
    • Brokers News
  • Tools
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
  • Brokers
  • Tools
  Latest
Make Money in Forex by Avoiding These Psychological Risks May 24, 2022
Next
Prev

Pound gains bullish traction ahead of data releases

News Feed by News Feed
May 18, 2021
in Analysis, Forex News
Reading Time: 3 mins read

British Chancellor Rishi Sunak expressed in an exclusive interview last week that post-Brexit Britain can look forward to a flourishing future as hopes and opportunities are rising again after a harsh start to the year. Following a robust employment report, April’s CPI inflation figures on Wednesday (06:00 GMT) and retail sales and flash Markit/CIPS PMI figures for the same month on Friday (06:00 GMT) could add further credence to the bullish economic picture. With the Bank of England (BoE) having gently taken its foot off the accelerator, another encouraging data set could only build confidence in the pound, though some caution is still warranted as the pandemic rages on. 

Economic optimism grows

Boris Johnson kept his word and pushed ahead with plans of allowing indoor dining at bars and restaurants this week despite the fast-transmitting Indian variant increasingly infecting some regions in the UK the government is optimistic that it could send the virus into retreat as two-thirds of the adult population have been vaccinated with a first dose of a Covid-19 jab, and infection cases and deaths have diminished to the lowest level since the pandemic started. That said, the deadly wave of infections in India is something that cannot be ignored, and the government may not fully reopen economy unless the circulating virus finally shows convincing signs of abating.

Nevertheless, a rapid recovery in the second quarter seems to be highly priced in after a quarterly contraction of 1.5% in the first three months of the year. Although monthly retail sales readings could lose pace in April, the annual gauge is expected to skyrocket by 36.8% from 7.2% previously on Wednesday, with the core measure, which excludes fuel, also excelling by 31.7%. On Friday, flash Markit/CIPS PMI figures for the same month may further imply growth momentum going into the second quarter as analysts project the services PMI index to jump to 62 from 61 in March, offsetting the slight pullback in the manufacturing PMI and stretching the composite PMI from 60.7 to 62.0.

Watch out inflation

While a V-shaped recovery has been long anticipated, speculations have been persistently rising globally for some time that a period of above-target inflation could derail the path of expansion, forcing central banks to rein in the amount of stimulus they have provided to mitigate the pandemic’s economic damages.The Bank of England’s governor has so far been echoing the Fed’s statement, saying that inflation could be “a bit bumpy this year as base effects come in and out”. However, his words put him at odds with the Bank’s chief economist Andy Haldane, who cautioned instead that “this momentum in the economy, if sustained, will put persistent upward pressure on prices, risking a more protracted – and damaging – period of above-target inflation”.

Haldane will step down later this year, therefore his remarks cannot be blindly considered as policy signals, though the difference of opinion between the key policymakers and the slowdown in bond purchases announced by the Bank at the start of the month suggests that inflation is becoming a challenging topic for the central bank and could drift policymakers deeper in thoughts if the sell-off in the British bond market continues and supply bottlenecks stay intact. Complains of labour shortages may also lead to higher prices if businesses offer higher wages to attract new employees.

For now, CPI inflation readings may not raise alarms on Wednesday although the figures are expected to double in April. Particularly the headline CPI is projected to bounce from 0.7% to 1.4% and the monthly print is expected to climb from 0.3% to 0.6%. Producer prices could also jump significantly.

GBP/USD levels to watch

As regards the market reaction, the data may reflect something that is already known. Therefore, unless the figures deviate significantly from forecasts, the pound may face modest movements. Even if that is the case, upside shifts, however, are more likely than downside ones as stronger inflation and business figures are positive for currencies, especially as the case of monetary tightening starts to flash on the horizon.

The technical picture for pound/dollar also switched back to bullish from neutral following the break above February’s closing price of 1.4140 today. If buyers clear the 1.4245 peak too, the door will open for the 2018 key resistance region of 1.4344

Otherwise, if the UK data disappoint as the US ones did recently, pushing the price back below 1.4140, the 20-day simple moving average (SMA) could come to the rescue near 1.4000. Lower, the 50-day SMA and the former support region of 1.3850 – 1.3800 may next attempt to pause downside corrections.


Source

Tags: GBPGBP/USDXM
ShareTweetShareSendShareSend

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Advertisement

Latest

Forex Psychological Risks

Make Money in Forex by Avoiding These Psychological Risks

JOANA N - MAY 24 | Psychology

Differences between the Foreign Exchange Market and Stock Market

DAVID G - May 23 | BASIC

Why Leverage is Important for Forex Traders?

Joana N - May 23 | Basic

How To Install Metatrader 5 Custom Indicators

MIRA TEAM - May 9 | Basic

Gross Domestic Product, First Quarter 2022

APR 28, 2022 | USD

The pound reacts to rising inflation like EM currency

Apr 13, 2022 | GBP/USD
Advertisement
  • About
  • Advertising
  • Disclaimer
  • Contact
  • Privacy Policy
  • Terms & Conditions
Risk Warning: All information on this website, including any opinions, articles, charts, prices, news, data, Buy/Sell signals, reviews, research and analysis is provided as general market commentary and does not constitute any investment advice. Mira FX is not liable for any damage or loss, including but not limited to, any loss of investment, which may be based either directly orindirectly on the use of or reliance on such information. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite. Do not invest more money than you can afford to lose. Note that the high level of leverage in forex trading may work against you as well as for you. Please seek advice of an independent financial advisor if you are not fully aware about the risks associated with foreign exchange trading. Forex trading on margin involves considerable exposure to high risk, and may not be suitable for all investors. Mira FX does not endorse any companies, products or services which are represented on Mira-FX.com The information on this website is subject to change without notice.
No Result
View All Result
  • About
  • Advertising
  • Central Banks
  • Contact
  • Disclaimer
  • Forex Brokers
    • Regulator
  • Index
    • Daily Forex Strategy
    • Forex Ebooks | Language: English
    • H1 Forex Strategy
    • H4 Forex Strategy
    • M15 Forex Strategy
    • M30 Forex Strategy
    • M5 Forex Strategy
  • Markets
    • EUR/JPY
  • Mira FX
  • Privacy Policy
  • Terms & Conditions
  • Tools
    • Economic Calendar
    • Fibonacci Retracement Calculator
    • Live Charts
    • Pivot Point Calculator

© 2022 Mira FX | Copying of materials is allowed only with the presence of an active link to a source page.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In