Last week, there were quite interesting market sentiments. They were connected primarily with the economic symposium in Jackson Hole and the US Federal Reserve System (FRS) chairman, Jerome Powell. As most investors expected, in his speech at this annual symposium, although it is held in a virtual format, Powell could at least hint about the timing of the start and the subsequent schedule for reducing the quantitative easing (QE) program. However, as we assumed on Friday, it is unlikely that we should now expect any specifics from the head of the Fed. Despite the rather brisk recovery of the American economy, it is taking place unevenly and with some excesses, such as increased inflation, an imbalance between supply and demand, and not quite even macroeconomic statistics.
However, the measures taken by the Fed are yielding results, and this is visible in the fairly rapid and more or less stable recovery of the US labor market. Well, the epic with COVID-19 has already filled up so much that there is no special desire to even write about it. Nevertheless, the Fed chairman again called the situation around COVID-19 significant risks, and it is difficult to argue with this. If even more infectious strains than the delta variant of coronavirus infection begin to appear, many countries will have to return to strict measures of restrictions and blockages, which will have the most negative impact on the pace of recovery of the American and the entire world economy. In general, the main essence of Powell's speech at the symposium boils down to the fact that under favorable conditions, the US Central Bank can begin reducing asset purchases at the end of this year, and it will be possible to complete this process fully.
As for international trade relations, Germany was China's main trading partner in Europe until quite recently, and this is quite natural. Most of the goods and products from China were sent to Germany. However, after Brexit and the COVID-19 pandemic, the situation has changed. The UK, in many ways unexpectedly, overtook the largest European trading locomotive. Now the United Kingdom has become the largest European partner in terms of demand for products from China. However, this may be a temporary phenomenon, after which everything will return to normal. At the moment, this is not so fundamentally important.
Weekly
We turn to the analysis of price charts, and here, as for the euro/dollar, there were some surprises. So, according to the trading results on August 23-27, the GBP/USD pair increased. However, at the same time, last week's trading started slightly higher than the previous closing, and the closing price of the last bullish candle fell significantly short of the opening of the previous week's trading. Thus, a reversal model of the "Harami" candle analysis appeared on the weekly chart of the pound/dollar currency pair. In essence, this is a bullish reversal model. However, it is not the strongest and is not always worked out by the market.
We see that the pair was clamped. At the top, the road is blocked by the red Kijun line of the Ichimoku indicator, and at the bottom, the upper border of the Ichimoku cloud and 50 MA are well supported. Based on the technical picture observed on the weekly chart, making trading decisions on GBP/USD is quite difficult. There are many strong resistances at the top, and there is a foundation at the bottom, which can be clung to in case of pressure. With all the pair's tendency to grow, I suggest making sure in the direction itself and only after that enter the market. Today, we will observe with what mood market participants will spend the first trading day of the current five-day period, and tomorrow, perhaps, they will look for options to enter the market.
