One can only admire the resourcefulness of the head of the European Central Bank as during her press conference, Christine Lagarde immediately removed all unpleasant questions about the catastrophic collapse in retail sales that followed immediately after the rise in consumer prices. It turns out that the difficulties in the economy are related exclusively to the restrictive measures imposed due to the coronavirus pandemic. And the fact that sales fell at exactly the same time as inflation replaced deflation are unrelated things. At least, this is the conclusion that can be drawn from the words of the head of the European Central Bank. For the pound, this is extremely important for the simple reason that because of this, there was no sharp collapse of the single European currency, which could pull the British currency along with it. Moreover, Christine Lagarde's speech overshadowed the publication of data on applications for unemployment benefits in the United States, which in the end no one paid attention to. But the number of initial applications decreased from 754 thousand to 712 thousand. The number of repeated requests decreased from 4,337 thousand to 4,144 thousand. By and large, this is all thanks to the ECB head..
Number of repeated applications for unemployment benefits (United States):
Today, the pound is unlikely to get away from the publication of data on industrial production. At this time, nothing else will be published. And the rate of decline in industrial production should accelerate from -3.3% to -4.0%. That is, the state of affairs in the British economy only continues to deteriorate, which obviously won't add to its optimism.
Industrial Production (UK):
In the United States, the growth rate of producer prices is expected to accelerate from 1.7% to 2.2%. This means that inflation retains the potential for growth, and may soon approach the target level of 2.0%. So, the likelihood that the Federal Reserve may tighten monetary policy before the end of the year only increases.
Producer Price Index (United States):
During the price rebound from the variable pivot point of 1.3800, the GBP/USD currency pair proceeded to the previously passed area of the psychological level of 1.4000 (1,3950/1,4000/1,4050). The natural basis associated with this area continues to put pressure on buyers, which leads to a slowdown.
The market dynamics is showing signs of slowing down, but at the same time there are periodic bursts of speculative activity.
If we proceed from the current location of the quote, it can be seen that the movement is within the boundaries of the psychological level.
It can be assumed that the movement within the boundaries of the psychological level 1,3950/1,4000/1,4050 will not last long, where the most optimal trading tactic is considered to be the method of keeping the price behind a particular range frame.
Let's concretize all of the above into trading signals:
- Short positions can be considered if the price is kept below 1.3950 for a four-hour period. In this case, the way may open in the direction of 1.3900-1.3860.
- Long positions can be considered in terms of price recovery relative to the correction, where holding the price higher than 1.4050 in a four-hour period will open the way in the direction of 1.4100-1.4150.
From the point of view of a comprehensive indicator analysis, it can be seen that the indicators of technical instruments on the minute, hourly, and daily timeframes signal a purchase due to the recovery process relative to the correction. Minute intervals have a variable signal, due to the price movement within the boundaries of the psychological level.
