Inflation in the United States remained unchanged, which, in the face of increasing fears due to global consumer price growth, is rather a positive moment than a negative one. Although, inflation itself is at the highest level since 2008. The important thing is that inflation has stopped growing. So, we should have seen a further decline in the pound, and not its growth, which happened. In other words, something went wrong. The whole point is that the pound is clearly oversold, and for its further decline, something more substantial was needed. For example, a decrease in inflation, which many expected. But as mentioned above, inflation remained unchanged. Nevertheless, it is worth paying attention to the extremely modest scale of the pound's growth. This is more like a slight disappointment, but nothing has changed fundamentally. Even the stability of inflation is now an exceptionally positive fact.
Inflation (United States):
Today's trading began with the publication of a number of macroeconomic data for the UK, which, by the way, were ignored. In particular, the first estimate of the GDP of the United Kingdom in the second quarter was not impressive, although the economic decline of -6.1% was replaced by growth of 22.2%. The result seems fantastic, but it's all about the effect of a low base, since in the second quarter of last year, the British economy showed a decline of -21.4%. In general, it is quite difficult to draw any serious conclusions based on these data. The same is the case with industrial production, whose growth rate slowed from 20.6% to 8.3%. That is, the influence of the low base effect is still felt here. However, on a monthly basis, industrial production decreased by -0.7%, although an increase of 0.5% was expected. And this, in turn, indicates the instability of the recovery of the British economy. In other words, the data are rather negative. And although we are not seeing a decline in the pound yet, it clearly has nowhere to grow.
GDP (UK):
Applications for unemployment benefits in the United States will definitely not be ignored. The number of initial requests should be reduced by 20 thousand, and the number of repeated requests by 80 thousand. We are talking about further improvement of the situation on the labor market. A recent report by the United States Department of Labor already showed an unprecedented decline in the unemployment rate. And the labor market is no less important than inflation, and its condition is a much more significant factor. It turns out that the pound is likely to resume its decline. The only thing that can somewhat smooth out the negative effect for it is the producer price index, which should grow from 7.3% to 7.5%. And it seems that an increase in producer prices will inevitably lead to an increase in inflation. Of course, this indicator has an impact on inflation, but it is not so strong that such a slight acceleration in the growth rate of producer prices affects consumer prices. Nevertheless, these data will still do their job, and the pound's losses will not be so serious.
Producer Price Index (United States):
The GBP/USD currency pair, while moving along a downward trajectory, found a foothold in the area of the 1.3800 level, where there was a reduction in the volume of short positions. This led to a stagnation, and then to a rebound in the price towards the Fibo level of 23.6 - 1.3885. The market dynamics after several days of slowing down again has signs of acceleration. The coefficient of speculative operations is growing.
Expectations and prospects:
Market participants will consider an upward movement if the price stays above the 1.3900 coordinate, opening the way in the direction of 1.3940.
A downward movement will be relevant in the event of a price rebound from the Fibo level of 23.6, this may lead to a reverse move in the direction of 1.3800.
A comprehensive indicator analysis signals a sale in the short and medium term. The intraday period is focused on the recent price rebound.
