Here are the details of the economic calendar from August 31:
The UK lending market was published yesterday, where there was a decline.
Details of statistics:
- The volume of mortgage lending in the period of July fell by 1.37 billion pounds.
- The number of approved mortgage loans of July fell from 80.27 thousand to 75.15 thousand.
- The volume of consumer lending by the Bank of England in the period of July fell by 42 million pounds.
* The volume of mortgage lending is net lending secured by housing, includes temporary loans provided by banks and other special lenders. The growth of the indicator is considered a positive signal that can lead to the strengthening of the national currency.
The number of approved mortgages is the number of permits for obtaining a mortgage. This indicator is considered an important indicator of the housing market. The growth of mortgage loans signals a good state of the housing market, and this stimulates overall economic growth.* The volume of consumer lending is an indicator for individuals who have taken out a consumer loan. This indicator reflects how much consumers can afford large purchases. This is a kind of indicator of the state of the economy.
According to the obtained results, the data on the UK lending market turned out to be significantly worse than expected. This led to a weakening of the pound sterling during the period of publication of statistics.
The preliminary inflation estimates in Europe, which rose from 2.2% to 3.0%, were considered to be the key event yesterday. This caused speculative surges in the market, primarily due to the fact that consumer prices rose above the forecast of 2.7%. Second, inflation is rapidly growing, and it is clear that this casts doubt on the economic recovery not only in the EU, but the entire world. So now, the fate of the European currency is in the hands of the European Central Bank.
In such a situation, speculators take over the market, as there is a high degree of ambiguity.
* The consumer price index is prepared by the Statistical Service of the European Union (Eurostat), which determines the change in prices of the selected basket of goods and services for a given period. This indicator is considered a key indicator for assessing inflation.
From the point of view of fundamental analysis, inflation growth is a positive signal for the national currency, but when consumer prices rise faster than forecasted, it is not considered the best signal.
Analysis of trading charts from August 31:
As expected, the upward interest in the first half of yesterday was local. The downward course resumed during the US trading session, returning the quote to the area of the level of 1.1800.
This once again confirms the fact that the euro is overbought, and the downward cycle from the beginning of June is still relevant in the market.
The trading recommendation on August 31 considered the possibility of the quote's reversal, which was indicated not only by the overbought euro, but also by the atypical upward movement during the Asian session.
The GBP/USD pair rebounded from the resistance level of 1.3800, returning the quote to the area of 1.3735. Despite the growing interest in short positions, there is still a correction from August 20 in the market. Therefore, it cannot be clearly said that the correction is over.
The trading recommendation on August 31 considered the possibility of opening sell positions from the resistance level 1.3800. The forecast of the movement was towards the level of 1.3735, which coincided 100%.
* Overbought market – a situation that occurs after prices have risen too high and quickly, and prices are expected to fall soon.
Short positions or Short means sell positions.* The resistance level is the so-called price level, from which the quote can slow down or stop the upward movement. The principle of constructing this level is to reduce the price stop points on the history of the chart, where the price reversal in the market has already occurred earlier.
Sept 1 economic calendar:
Today, Europe will release its data on the unemployment rate at 9:00 Universal time, where a decline from 7.7% to 7.6% is expected. The news is positive, but after the intriguing inflation data, there are huge doubts that the euro will rise.
In turn, the United States is to publish the ADP report on the level of employment in the private sector for August, which predicts an increase of 613 thousand new jobs. The recovery of the labor market is a positive signal for the economy and the national currency.
* The ADP employment report shows the change in the number of employees in the United States. The growth of the indicator has a positive effect on the unemployment rate in the country, as well as on consumer activity, which in turn has an impact on economic growth.
Trading plan for EUR/USD on September 1:
The quote stopped at the level of 1.1800 after declining, where it formed a stagnation within the borders of 1.1790/1.1815.
In this case, the best trading tactic is the method of breaking through one or another border of the range.
Buy positions will be relevant if the price is held above the level of 1.1820, which will open the way towards 1.1845.
Sell positions will be considered if the price is held below the level of 1.1780, which will open the way towards 1.1740-1.1700.
Trading plan for GBP/USD on September 1:
The pivot point in the area of 1.3750 slowed down the decline from the resistance level of 1.3800. In order for the downward cycle to be prolonged to new price levels, the quote must be kept below the 1.3725 level. This will lead to the pound's subsequent weakening towards 1.3690.
If the price does not hold below the level of 1.3725, a reversal to the resistance level is not excluded.
