The British pound continues to be in a fever on the news of the start of a softening operation by the Bank of England, which decided to buy long-term government bonds worth just over 1 billion pounds on its balance sheet. The amount of short-term QE is not large, rather, it is the market’s psychological reaction to the signal from the central bank that the rate hike may slow down, as inflation issues are already receding into the background. Data on British GDP for the 2nd quarter will be released today.
A decline of 0.1% is expected, or contraction of growth from 8.7% y/y to 2.9% y/y. The volume of mortgage lending in September is expected to decrease from 5.05 billion pounds to 4.90 billion, the volume of consumer lending may decrease from 1.42 billion to 1.40 billion. In the US, there will be data on income and expenses of individuals.
The forecast for income in August is 0.3%, expenses are expected to grow by 0.2%. We believe that the market should have already calmed down from the BoE’s “hints”, as the debt market has already done, where yields on 10-year government bonds are now held at the level of September 26 (4.23%), and again turn to the overall economic picture Europe and England.
Yesterday the pound rose by more than 220 points, and this morning the price reached the target level of 1.1170. The daily Marlin Oscillator slowed down in growth. It may very well be that from the level reached, the price will start to turn back to 1.0830. To reach 1.1305, it is necessary to get the price to settle above 1.1170, since the volatility is still decreasing. But in this case, it will happen next week. The limit of corrective growth seems to be the resistance of the MACD line (1.1460).
On a four-hour scale, the price consolidated above both indicator lines, but growth slowed down at the target level of 1.1170. The Marlin Oscillator is turning down. A sign of the completion of the correction and a reversal of the trend will be the departure of the price under the MACD indicator line. The first target is 1.0830.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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