There is no change in my technical view for the performance of the GBP/USD pair. 

• At the beginning of this week’s trading, and despite the holiday in Britain, the price of the GBP/USD currency pair fell to a stronger support level, towards 1.1648, its lowest since the height of the market crash in 2020. It settled around the 1.1700 level at the beginning of trading today, Tuesday.
• The US dollar is still the strongest against everyone with expectations of a strong raise of the US interest rates in the coming months to contain US inflation, which has reached its highest level in 40 years.
• The sterling faces strong expectations of a British economic recession and the uncertainty of the political future in the country to choose a new prime minister.

Federal Reserve Chairman Jerome Powell delivered a stark warning on Friday about the Fed’s determination to fight inflation by raising US interest rates further: it will likely cause pain to Americans in the form of a weak economy and job losses. The message arrived with a heavy blow to Wall Street markets, sending the Dow Jones Industrial Average down more than 1,000 points on the day.

“These are the unfortunate costs of lowering inflation,” said Powell in a high-profile speech at the Federal Reserve’s annual economic symposium in Jackson Hole.

Investors had been hoping for a signal from Powell that the Fed may adjust US interest rate hikes soon later this year if inflation shows more signs of abating. But the Fed chief indicated that time may not be soon, and stocks have fallen in response.

Runaway price hikes have left most Americans nervous about the economy, even as the unemployment rate has fallen to a half-century low of 3.5%. It also caused political risks for US President Joe Biden and congressional Democrats in the fall elections, as Republicans decried Biden’s $1.9 trillion financial support package, approved last year, as driving up inflation.

Some on Wall Street expect the US economy to fall into recession later this year or early next, after which they expect the Federal Reserve to reverse itself and cut interest rates. However, a few Federal Reserve officials have opposed this idea. Powell’s comments suggest that the Fed aims to raise the benchmark interest rate – to about 3.75% to 4% by next year – but not so high that the economy falters, hoping growth slows long enough to conquer high inflation.

GBP/USD Forecast:

There is no change in my technical view for the performance of the GBP/USD pair.  The general trend is still bearish and stability below the 1.2000 psychological support motivates the bears to move further down, amid clear ignoring the movement of the technical indicators on the daily chart to oversold levels.

There will be no chance for the sterling to recover for a while without sudden indications from the Bank of England, which is determined to raise interest rates with no fear of economic recession. According to the performance on the daily chart, breaking the resistance 1.2080 is important for the bulls to launch and change the direction, even for a short time.

On the downside, the general trend is the strongest so far, the closest support levels for the currency pair are 1.1640, 1.1580 and 1.1500, respectively. After returning from a British holiday, money supply figures, net lending to individuals and mortgage approvals will be announced. From the United States, the US consumer confidence and the number of job openings will be announced.

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The rising cost of European energy supplies has driven deep declines in many financial model-derived estimates of the single currency’s fair value this year, and with little respite on the horizon, some of the market’s most bearish forecasters are feeling upbeat about their EUR/USD outlook.

The EUR/USD will decline significantly in 2022. While factors such as the US economy and Fed policy have been a significant driver of this decline, it is the rising cost of energy supply disruptions that is giving most confidence to some other markets, which implies the eventual collapse of the euro.

The EUR/USD currency pair against the dollar EUR/USD fell last week to the 0.9900 support level, its lowest in 20 years, and in reaction to Jerome Powell’s statements, he tried to recover on Friday to the 1.0090 resistance, but he returned in his strongest downward path towards the 0.9964 support level and closed trading around it.

The euro gained a respite for most of the last week after falling below parity with the dollar during Monday’s session, but European gas prices remained at high levels after days of massive increases. These costs and their expected impact on companies and households alike is what prompts some forecasters to feel confident that the fall of the euro for more than 18 months may still have a long way to go.

The price of electricity in Germany will increase over the next year by more than 1000 US dollars in terms of Brent oil energy equivalent. This is far from normal, and so says Jordan Rochester, the expert at Nomura: “It is a crisis that does not only stem from the restricted energy supplies from Russia, but a series of unfortunate issues.”

In addition to energy constraints, the Eurozone faces the brunt of climate change with record-breaking flash floods and droughts, as well as slowing trade with China and the risk of a recession in the United States. However, we believe that the biggest challenge that Europe will face this winter is not inflation, but inflation accompanied by recession.

“This is why we expect the EUR/USD to drop to the 0.90 support this winter,” added Rochester.

European gas prices have more than doubled over the past week after the Russian gas monopoly said it would halt supplies through a key pipeline for three days in September, adding pressure on an already tight market. It is likely that the economic burdens created by these price increases will remain a headwind for the single European currency in the absence of credible supply-side responses from European countries to the ongoing Russian gas diplomacy.

“These incomprehensible price increases add pressure on European leaders to find a solution to the unfolding energy crisis that will put pressure on many families,” said Bas Van Giffen, chief economic analyst at Rabobank.

At the same time, American families are struggling to pay their utility bills. However, this situation pales in comparison to the rising prices faced by European consumers.

The rising cost of European energy supplies has driven deep declines in many financial model-derived estimates of the single currency’s fair value this year, and with little respite on the horizon, some of the market’s most bearish forecasters are feeling upbeat about their EUR/USD outlook.

Both Rabobank and Nomura have predicted a sustained break without parity in the EUR/USD rate over the coming months. According to their forecasts, the EUR/USD is likely to fall to 0.90 this winter with a terms of trade shock pointing to 1980s levels at 0.65 as a possibility.

Expectations of the EUR/USD:

• In the near term and according to the performance on the hourly chart, it seems that the EUR/USD currency pair is trading within the formation of an ascending channel.  This indicates a slight upward trend in the short term in market sentiment.
• Therefore, the bulls will target short-term profits at around 1.0039 or higher at 1.0083. On the other hand, bears will look to pounce on possible pullbacks around 0.9963, or lower at 0.9913.
• In the long term and according to the performance on today’s chart, it seems that the EUR/USD currency pair is trading within the formation of a descending channel. This points to a significant long-term downward wound in market sentiment.
• Therefore, bearish speculators will look to extend the current path of declines towards 0.9810 or lower to 0.9612. On the other hand, the bulls will target rebound profits at around 1.0182 or higher at the 1.03 level.

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Significant short-term bearish momentum in market sentiment.

Amid the recovery of the US dollar in the forex market, the pound sterling was the main loser against it. Accordingly, the Pound sterling fell against the dollar, GBP/USD, to the support level of 1.1792, the closest to its lowest during the trading of the year 2022. It closed trading last week, stable around the 1.1825 level. The pair’s losses pushed the technical indicators towards oversold levels However, the weakness factors still warn of further losses for the currency pair. This week, the US dollar will be the focus of investors’ attention, and this time it will be monitoring to announce the growth rate of the US economy, and what will be mentioned in the Jackson Hole symposium organized by the US Federal Reserve. Jerome Powell’s statements in this event will receive more attention and monitoring.

GBP/USD Economic Analysis

The GBP/USD currency pair is trading affected by the announcement that the US initial jobless claims for the week ending August 12th exceeded expectations at 265 thousand with the number of claims recorded at 250 thousand. Continuing claims also exceeded 1.438 million with a proceeds of less than 1.437 million. Prior to that, US retail sales figures for July exceeded expectations at 0.6% with a growth rate of 0.8%. On the other hand, US general retail sales for this month came out against expectations (MoM) at 0.1% with a change of 0%.

From the UK, UK CPI for July rose again to 10.1% (y/y) compared to expectations of 9.8% and 9.4% recorded in the previous month. The change (MoM) was 0.6% compared to a forecast of 0.4% but lower than the previous month’s 0.8%. The seasonally adjusted core PPI for July outperformed the forecast (MoM) by 0% with a print of 1%. On the other hand, the equivalent (on an annual basis) beat expectations at 15.9% with a rate of 14.6%.

There has been a sudden rise in retail sales, but consumer confidence is dropping to a 50-year low. Despite rising British inflation, UK retail sales surprised with growth in July, despite the much-watched gauge of consumer confidence dropping to an all-time low.

As announced, UK retail sales volume rose 0.3% in July 2022 after declining 0.2% in June 2022, according to the Office for National Statistics. This exceeded expectations as the consensus was looking for another reading of -0.2%. Retail sales are now down 3.4% y/y, slightly worse than the consensus had expected of -3.3%, but up in June -5.9%. The Office for National Statistics notes that despite a better-than-expected result for July, retail sales have been trending downward since the summer of 2021.

The data showed that for most categories, although the total value of goods sold increased in many cases, the quantities sold decreased. This reflects the effect of higher prices which raise the amount of money in circulation but at a lower turnover. The data comes in the same week that the UK reported year-on-year inflation growth of 10.1% for the month of July, with the Bank of England expecting the peak to be closer to 13%. Given the rising inflation expectations, other data released on Friday showed that British consumer confidence fell to another record low.

According to the advertiser, the GfK consumer confidence gauge fell to an all-time low of -44 in August, from a reading of -41 in July. At -60, a sharp drop in consumers’ expectations for the economy in the next 12 months was one reason for this record result. GfK says the result was due to a persistent rise in inflation, which is expected to peak later in the year.

Although the retail sales data for July beat expectations, the outlook remains tough. The upside surprise was driven by a massive 4.8% m-o-m increase in out-of-store retail, i.e. online. Comments from retailers suggest that this is due to a combination of online promotions that boost sales. Overall, the data released on Friday is clear: the British consumer is feeling the impact of higher prices and is likely to ease further, especially given that peak UK inflation is still some way off.

GBP/USD technical analysis

On both the short and long term, the recent losses of the GBP/USD pair pushed the technical indicators towards oversold levels. In the near term and according to the performance on the hourly chart, it appears that the GBP/USD is trading within a descending channel formation. This indicates a significant short-term bearish momentum in market sentiment. Therefore, the bears will look to extend the current declines towards 1.1800 or lower to 1.1720. On the other hand, the bulls will target potential recovery profits at around 1.2025 or higher at 1.2114.

In the long term and according to the performance on the daily chart, it appears that the GBP/USD currency pair is trading within the formation of a descending channel. This indicates a significant long-term bearish momentum in market sentiment. Therefore, the bears will look to maintain control of the pair by targeting profits at around 1.1660 or lower at 1.1295. On the other hand, the bulls will target potential retracements around 1.2241 or higher at 1.2605.

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With the return of the US dollar from the Independence Day holiday, it completed the path of its sharp gains against the rest of the other major currencies, amid strong expectations of more US interest rate hikes throughout 2022. The share of the GBP/USD currency pair fell to the 1.1898 support level, the lowest for the currency pair since March 2020 and settled around the 1.1925 level, and there is no powder for an improvement in the currency pair’s performance so far. The dollar is awaiting the minutes of the last meeting of the Federal Reserve and the numbers of US jobs.

Sterling will continue to lose more value against the US dollar than current levels say forex analysts at JP Morgan. A new currency strategy note from the Bank of Wall Street found that “a strong US dollar is not declining” and therefore they maintain a “bearish” position for GBP/USD; Strategic selling position. To justify expectations of a weaker pound against the dollar, JPMorgan said Britain’s inflation remains the highest in the G10 while economic growth through 2023 will lag behind most of its peers.

“The domestic cyclical outlook will continue to dampen the outlook for sterling, even with the fiscal consolidation,” says Paul Megizzi, currency analyst at JPMorgan. And “In the meantime, it seems unlikely that the Bank of England will stem the downward pressure on sterling on its own.” UK inflation is not expected to peak until October, economists say, citing the timing of the upcoming energy cap hike from Ofgem.

JP Morgan expects UK CPI inflation to approach 11% y/y at this point, underlining that the cyclical outlook for the UK economy remains bleak – in fact, the project is the second lowest in the G10 based on cumulative growth. over the next six quarters to 2023.” “So, while the Bank of England has signaled its willingness to speed up rate hikes – perhaps in August by 50 basis points – it appears that the swaps that had up to this point called for a more gradual pace of hikes will continue, and as long as that is the case sterling should continue to hold Trade deprived of nominal politics”.

As for the US dollar outlook, the multi-month uptrend is far from over, says JP Morgan. “We have recommended a defensive and long-term stance on currencies throughout the year, given the combination of weak growth, high inflation and tight monetary policy,” says Mira Chandan, global FX analyst at JP Morgan in London. It also says: “Developments in the past month – even more hawkish central banks including the Federal Reserve, declining PMI and consumer confidence, and higher energy prices in Europe – all reinforce this position.”

As such, JP Morgan forecasts the GBP/USD exchange rate at 1.15 by the end of the year and 1.16 by the end of March 2023. For those looking to lock in current rates, Horizon Currency foreign exchange specialists say they are currently offering spot rates between 40 and 50 pips. away from the market. Deep in July, the Pound started in the red against the Dollar, falling back below 1.20 amid a significant drop in UK government bond yields. This drop is a sign that the market is lowering its expectations of future interest rate hikes by the Bank of England.

GBP/USD analysis

So far, the general trend of the GBP/USD currency pair is still bearish, taking into account that the currency pair’s move below the 1.2000 support level moves technical indicators towards strong oversold levels, so currency traders may consider catching long positions if factors stop the gains of the US dollar. This may happen if the US job numbers come in less than expectations, or the tone of the minutes of the last meeting of the US Federal Reserve comes less hawkish than the market expectations.

The closest support levels for GBP/USD today are: 1.1880, 1.1800 and 1.1710, respectively.

The closest resistance levels for GBP/USD today are: 1.2000, 1.2085 and 1.2235, respectively.

The pair will likely have a relief rally ahead of the Fed decision and then resume the bearish trend ahead of the BOE.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.1850.
• Add a stop-loss at 1.2050.
• Timeline: 1 day.

Bullish View

• Set a buy-stop at 1.1980 and a take-profit at 1.2050.
• Add a stop-loss at 1.1900.

The GBP/USD price continued its remarkable sell-off as UK stagflation risks continued. The pair slumped to 1.1950, which was the lowest level since March 2020. It is on track to drop for the third consecutive week. Also, sterling has dropped by over 16% from its highest point in May 2021.

UK Stagflation Concerns

The UK is going through a period of stagflation where slow economic growth has converged with a period of high inflation.

Data published on Monday revealed that the country’s economy contracted for the second straight month in April. The numbers also showed that key sectors of the economy like construction, industrial, and manufacturing output also declined in April.

And on Tuesday, data by the Office of National Statistics revealed that the labor market is also experiencing jitters as inflation soars. The unemployment rate rose unexpectedly while wage growth rose at a slower pace than expected. These numbers imply that inflation is rising at a faster pace than wages.

Therefore, the GBP/USD pair is crashing as investors anticipate divergence between the Federal Reserve and the Bank of England.

On the one hand, the Fed is expected to continue tightening at a more aggressive pace, with some analysts expecting a 0.75% increase. The bank is also expected to point towards more hikes later this year.

On the other hand, analysts expect that the Bank of England will hesitate when it meets on Wednesday. This means that the bank will deliver a relatively bearish rate hike. The concern among the BOE is that more rate hikes in a period of stagflation will hurt the economy.

The GBP/USD pair will react mildly to the latest US retail sales numbers that will come out during the American session. These numbers are expected to show that the country’s retail sales declined in May.

GBP/USD Forecast

The three-hour chart shows that the GBP/USD pair has been in a strong bearish trend in the past few days. Its attempt to rebound on Tuesday failed when it moved to 1.2200. The pair managed to move below the important support at 1.2163, which was the lowest level on May 13th. It also dropped below 1200.

It has moved below the 25-day and 50-day moving averages and is along the lower side of the Bollinger Bands. Therefore, the pair will likely have a relief rally ahead of the Fed decision and then resume the bearish trend ahead of the BOE. The key level to watch will be at 1.1900.

The price of Sterling came under severe and widespread pressure as global stock and bond markets plunged. This occurred while events in Westminster sparked incorrect speculation about the UK-EU trade relationship, creating a perfect storm for sterling assets in the process. According to the performance in the forex market, the British pound tumbled, and its biggest losses were at the hands of the Indonesian rupiah, the South African rand, the Indian rupee, and the Korean won, but with the US dollar and the euro closely behind them in this exact order. In the case of the GBP/USD currency pair, it fell to the 1.1933 support level, its lowest in years, and is settling around the 1.2000 level at the time of writing the analysis.

Returning to our recent technical analyzes for this pair, we mentioned that the chance of falling to the psychological support level 1.2000 is very likely if it breaches the 1.2165 support, which happened more than we expected.

The losses came alongside declines in the stock and bond markets but were also sharp and broad enough to indicate the domestic impact in action on sterling. “But with the Federal Reserve seemingly close to announcing a massive 75 basis point rise tonight, and after the pound has already weakened to $1.22, we are sticking with our expectations for a 50 point increase,” said Paul Dills, chief UK economist at Capital Economics. basis from 1.00% to 1.50%.”

Sterling’s losses started early when figures from the Office for National Statistics (ONS) indicated that the UK labor market may cool down faster than the Bank of England and other forecasters had forecast. According to the official announcement, the country’s unemployment rates rose from a multi-decade low of 3.7% in March to 3.8% in April, while the National Statistics Office’s measures of wage and salary growth came in less than what economists had expected, barely a day after other data that indicated that Britain’s economic growth may slow faster than many expected.

These numbers followed other figures released in May which showed UK inflation rose to 9% in April, the highest level in several decades for price growth, but also below the Bank of England’s forecast of 9.1%, which finds the same Now in lag. This is a critical situation ahead of Thursday’s interest rate decision by the Bank of England.

All the latest data from the UK suggests economic demand is waning, and there is a risk that the Bank of England will feel tempted to raise rates by just 0.25% on Thursday, which goes against more recent market expectations. Inclined towards a greater movement of 0.50%. The above is an important reason behind the poor performance of the pound in the market, although it is appropriate that these losses come in the wake of the government putting in place domestic legislation to address the Northern Ireland Protocol and the risks it poses to stability in the province.

This protocol device was previously known as the “Northern Irish Backstop” something that was widely misreported as well as misunderstood in the media and across financial markets, meaning it could have been a contributing driver to the pound’s losses on Tuesday. This is a reasonable and practical solution to the problems facing Northern Ireland. It will protect the EU’s single market and ensure that there is no hard border on the island of Ireland. We are ready to achieve this through talks with the European Union. Foreign Secretary Liz Truss said: “But we can only make progress through negotiations if the EU is willing to change the protocol itself – at the moment they are not.”

The UK government has embarked on changes to the Northern Ireland Protocol under Article 16 after 18 months of fruitless discussions with the European Commission and members of the EU bloc.

According to the technical analysis of the pair: There is no doubt that the collapse in the price of the GBP/USD currency pair below the psychological support confirms the strength and control of the bears on the trend. Despite the movement of technical indicators towards strong and sharp saturation levels, forex investors will not think In the demand for buying, except until the reaction from the announcement of the US Federal Reserve today, and the Bank of England tomorrow. The path of raising interest rates from the two banks, in addition to the performance of global stock markets, are important factors to determine the continuation of the current collapse or rebound, even if temporarily.

The closest support levels for the Sterling dollar today are 1.1945 and 1.1830, respectively. According to the performance on the daily chart, it will be important to break the resistance levels 1.2520 and 1.2700 to change the current bearish outlook.

The overall outlook for the AUD/USD pair is bearish ahead of the upcoming FOMC decision

Bullish view

• Buy the AUD/USD pair and set a take-profit at 0.700.
• Add a stop-loss at 0.6900.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 0.6900 and a take-profit at 0.6800.
• Add a stop-loss at 0.7000.

The AUD/USD price retreated sharply as the US dollar maintained its bullish trend. It fell to a low of 0.6940, which was the lowest level since May 16th. It has fallen by more than 4% from its highest point this month.

US dollar strength

The AUD/USD pair continued its bearish trend amid the rising worries of a more hawkish Federal Reserve. Analysts expect that the Fed will continue with its quantitative tightening (QT) policy and then hike interest rates at a faster pace.

These worries have led to a major crash in key assets. For example, American and Australian stocks crashed hard. The ASX index declined by more than 4% and entered a bear market

Similarly, cryptocurrencies and commodities also continued falling. For example, the closely watched Bloomberg Commodity Index declined by more than 1.8%. This is notable since Australia is one of the biggest commodity exporters globally.

The AUD/USD pair also retreated after China restarted some of its Covid restrictions. Important cities like Beijing and Shanghai announced that they will restart some lockdowns and restrictions after they discovered some more cases.

More lockdowns in China have an impact on the Australian economy since it is the biggest buyer of Australian commodities.

The pair declined after worries of more weakness in Australia and around the world continued. In a statement, the Chief Investment Officer of AustralianSuper warned that the country was heading for a material downturn. The company’s flagship fund is expected to have its first loss in 13 years.

His statement came a week after the Reserve Bank of Australia (RBA) decided to hike interest rates by 0.50%. Analysts now expect that the RBA will raise interest rates to 3.1% by end of the year.

AUD/USD signal

The AUD/USD pair continued falling as the US dollar strength continued. It managed to move below the important support at 0.6970, which was the first support of the standard pivot points. It also declined below the 25-day and 50-day moving averages while the Relative Strength Index declined to the extreme oversold level of 20.

Therefore, the overall outlook for the pair is bearish ahead of the upcoming FOMC decision. However, the pair will likely have a relief rally as some investors buy the dips. If this happens, the next key point will be at 0.700.

The cheery tone of global markets helped correct the heavily sold pound higher, although there is still little conviction among analysts that any bounce will sustain itself in the near term. Yesterday, the price of the GBP/USD currency pair succeeded in recovering to the resistance level of 1.2400, but with the continuation of the pessimism caused by the Bank of England, the bears regained control. The sterling dollar pair fell again in the same general path to the 1.2237 lowest support level for the pair in years, which is stable around it time to write the analysis.

Many market commentators today are picking up on the decline in US bond yields, a sign that investors may be beginning to consider the implications of peak inflation in the US at current levels. It was the sharp rise in US bond yields that raised fears of rising inflation and at the same time caused losses in global equities.

US 10-year Treasury yields have fallen to around 2.93% as inflation expectations decline, coinciding with a decline in the US dollar that tends to track the rise of Treasuries. This helped relieve pressure on global equity markets and the British Pound showing a strong positive correlation to overall sentiment. Further support for stocks comes amid signs that China’s coronavirus cases may ease, but with no sign that the authorities will ease their approach to the non-proliferation of Covid, optimism will remain cautious.

We reported at the start of the week that sterling was ready to bounce back from oversold levels, and increasingly extended positions and bull markets proved to be the catalyst needed to trigger a correction. According to the latest available position data, the British pound entered the week as the second most short-sold major currency after the Japanese yen, meaning that a sharp counter-trend return was increasingly possible.

Moreover, the British Pound exchange rate entered the new week in a particularly oversold state, with the RSI on the daily chart reading at 26.36; An RSI reading of less than 30 indicates that a financial asset is oversold. These conditions are often taken by traders to signal a rebound or stop in a downtrend, as oversold conditions cannot continue indefinitely. However, many forex analysts still see the higher corrections in the British pound sterling should be seen as temporary, especially if global markets continue to lose ground.

If the bounce in stocks extends and proves to be a real turnaround, the pound could also face a brighter outlook. The near-term recovery in various sterling exchange rates comes after the Bank of England’s May monetary policy meeting led to significant declines, leading currency analysts to expect further weakness. As such, forex analysts at ING Bank raised their expectations for the EUR/GBP exchange rate while also warning that risks to this view are to the upside.

Meanwhile, forex analysts at investment bank MUFG say they have a tactical “go long” recommendation on the EUR/GBP, anticipating further gains from the EURGBP. Investment bank Goldmans Sachs raised its target in a deal betting that the euro would appreciate more in value against the pound.

According to the technical analysis of the pair: The recent losses of the GBP/USD currency pair increased expectations of a further collapse towards the 1.2000 psychological support as an available destination for the bears dominating the direction of the currency pair. An actual and continuous reversal of the trend will not occur according to the performance on the daily chart without breaking the resistance levels 1.2855 and 1.3000, respectively. So far, the pair’s gains will remain at any time an opportunity to sell.

The GBP/USD pair will be affected today by the announcement of the growth rate of the British economy, and the announcement of the US Producer Price Index and weekly jobless claims

Gold prices continued to decline, losses of the yellow metal this week, and reached the support level of $ 1832 for an ounce, the lowest in three months. The downward pressure came in conjunction with the rise in the price of the US dollar near its highest levels in two decades, amid expectations that the Federal Reserve will raise US interest rates in the coming months. Accordingly, the dollar index rose to 103.98, although it remained somewhat sluggish earlier in the day.

On the other hand, lower long-term bond yields helped limit the decline in the price of gold.

In the same performance, silver futures closed at $21.424 an ounce, while copper futures settled at $4.1545 a pound.

Today, Wednesday, investors and markets are awaiting the release of US inflation data, which may affect the monetary policy of the Federal Reserve. The Labor Department is due to release its report on consumer price inflation today, with the annual rate of price growth expected to slow to 8.1% in April from 8.5% in March. The recent snapshot of inflation could affect expectations about how aggressively the Federal Reserve plans to raise US interest rates.

Wall Street indices ended a choppy day of trading with a mixed close on Tuesday, after a rally in technology stocks helped reverse an early slide. Accordingly, the S&P 500 index closed 0.2% higher, cutting a three-day losing streak, after swinging between a gain of 1.9% and a loss of 0.8%. The day before, the benchmark index fell 3.2%, hitting its lowest level in more than a year.

The Dow Jones Industrial Average was down 0.3%, while the Nasdaq Technology Index was up 1%. Big tech stocks, which have been swinging sharply up and down lately, helped cope with losses elsewhere in the market. The subtle market action came ahead of the Labor Department’s release of the US Consumer Price Index, a key economic report on inflation that investors will be watching closely as they try to gauge how aggressively the Federal Reserve is in raising interest rates while fighting inflation.

In contrast, US Treasury yields have risen, and stocks have been very volatile lately as Wall Street adjusts to a strong shift in the Fed’s policies away from supporting the economy. Where the central bank raises interest rates from their historical lows to combat the ever-increasing inflation, which reached its highest level in four decades. The Fed has raised its benchmark interest rate from nearly zero, as it has sat for most of the coronavirus pandemic. He indicated last week that he would double the size of future increases.

Higher prices for raw materials, freight and labor have slashed companies’ financial results and prospects. Many companies are raising prices on everything from clothing to food, raising concerns that consumers will eventually cut back on spending, hurting economic growth.

According to the technical analysis of gold: On the daily chart, the recent losses of the gold price have moved the technical indicators towards oversold levels and buying may be considered in preparation for the expected rebound in the gold price to rise again. The support levels of 1815 and 1790 may be the most appropriate to think about that. Global financial reaction from the announcement of US inflation figures.

In addition, global geopolitical tensions led by the Russian-Ukrainian war, along with fears of an epidemic, still represent a good environment to prevent the complete collapse of the gold price in light of the general trend of global central banks towards tightening their monetary policy. On the other hand, the psychological resistance of 1900 dollars for an ounce is still the most important for the bulls’ return to control the trend.

The pound sterling suffered a significant loss in its value against the euro, the dollar, and other major currencies last week.  In the case of the GBP/USD currency pair, it fell to the 1.2275 support level, the lowest in two years, before closing trading stable around the 1.2335 level. Analysts say that more losses are possible this week, although a short rally cannot be ruled out.

Sterling’s exchange rates fell sharply in the wake of the British central bank’s decision to raise 25 basis points, but it warned that economic growth was likely to stall, and inflation would rise higher than initially expected. It was the bank’s latest set of forecasts, and the message in it that the market is expecting too many upsides, causing a lower recalibration of expectations, and the British Pound.

According to the performance of the forex market, the exchange rate of the pound to the euro fell by 1.44% last Thursday alone, and lost by 2.0% for the month of May. The pound-dollar exchange rate faces an even bigger loss of 4.30% for the month of May. “The narrative is very strong at the moment, and it’s hard to see much of a recovery in sterling,” JP Morgan’s FX desk told clients.

Overall, the GBP/USD currency pair on Friday halted the current bearish movement and instead is trading neutral after the latest round of US data. It now appears that the currency pair has found support at around 1.2332 after the US Labor Department brought back the US jobs data with mixed results.

Meanwhile, forex analysts at ABN AMRO say they also expect further weakness in the pound against the euro and dollar. Whereas, economists at ABN AMRO expect two more rate hikes from the bank in 2022, which is a bigger shortfall than the market still expects. These rallies are seen in June and August, but then expect the BoE to turn dovish, as the risk of recession begins to weigh more heavily in policy deliberations.

Accordingly, the bank’s analysts say: “Our new view is still more pessimistic than financial market prices. Therefore, we continue to expect further weakness in the pound.” ABN AMRO expects the exchange rate of the euro against the pound to be at 0.85 by the end of June, 0.85 by the end of September and 0.86 by the end of December. This gives an expectation of the Pound against the Euro at 1.1765 and 1.1630. Their point forecasts for the GBP/USD exchange rate are at 1.26 by the end of June, 1.24 by the end of September, and 1.22 by the end of the year.

Those readers hoping for a rebound in the Pound should note that near-term momentum remains firmly in motion against the currency, although some near-term relief rallies may form next week. But for now, there is a consensus among forex currency analysts that any strength is likely to be short-lived.

However, a more sustainable recovery could form once the market eliminates the excessive number of interest rate increases that the bank is anticipating.

According to the technical analysis of the currency pair: In the near term and according to the performance of the hourly chart, it appears that the GBP/USD currency pair is trading within the formation of a descending channel. This indicates a short-term bearish slope in market sentiment. Therefore, the bears will look to maintain control of the currency pair by targeting profits at around 1.2245 or lower at 1.2150. On the other hand, the bulls will target potential bounces around 1.2435 or higher at 1.2526.

In the long term and according to the performance on the daily chart, it appears that the GBP/USD currency pair is trading within a descending channel formation. This indicates a significant long-term bearish momentum in the market sentiment. Therefore, the bears will look to ride the formation of the current trend towards support 1.2063 or lower to support 1.1689. On the other hand, the bulls will target long-term profits at around the 1.2622 resistance or higher at the 1.2996 resistance.