The outlook for BTC is bullish, with the next key level to watch being at 25,000.

Bullish View

• Set a buy-stop at 24,000 and a take-profit at 25,000.
• Add a stop-loss at 23,000.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 23,677 and a take-profit at 22,000.
• Add a stop-loss at 25,000.

The BTC/USD price retreated to the lowest point since August 12 as demand for cryptocurrencies waned. The pair was trading at 23,865, which was lower than this week’s high of 25,205. This price is about 28% above the lowest level this year.

FOMC Minutes Ahead

Bitcoin price has had a difficult time this week as demand for cryptocurrencies waned and as profitable investors started taking profits.

This performance also happened as the US dollar rebounded and stocks wavered. The US dollar index rose to over $106.50, which was higher than last week’s low of $104.50. In most cases, BTC has an inverse relationship with the US dollar.

American stocks also wavered even after the relatively strong earnings by Walmart and Home Depot. The Dow Jones and the tech-heavy Nasdaq 100 indices were relatively unchanged in the overnight session.

The key potential catalyst for the BTC/USD price will be the upcoming minutes by the Federal Reserve meeting that happened on July 28. In that meeting, Fed’s officials decided to hike interest rates by 0.75%, bringing the total year-to-date increase to 225 basis points.

The Fed also decided to continue with its quantitative tightening policy. Most importantly, the dot plot showed that most officials believed that more hikes are necessary. Therefore, these minutes will provide more color about what happened during the meeting. The BTC/USD pair tends to show significant volatility after the FOMC minutes.

Most Fed officials still believe that more hikes are necessary even after data revealed that the country’s inflation decline slightly last month. According to the Bureau of Labor Statistics (BLS), the headline inflation dropped from 9.1% in June to 8.7% in July, The unemployment rate also dropped from 3.6% to 3.5%.

BTC/USD Forecast

The four-hour chart shows that the BTC/USD pair has been in a downward trend in the past two days. As it dropped, it tested the lower line of the ascending triangle pattern. In price action analysis, this pattern is usually a bullish sign. At the same time, the pair moved slightly below the 25-day and 50-day moving averages and the standard pivot point.

Still, the outlook for BTC is bullish, with the next key level to watch being at 25,000. A move below the important support level at 23,000 will invalidate the bullish outlook.

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Throughout the last week’s trading the price of the EUR/USD currency pair is trying to rebound higher to break the general bearish trend. However, the price of the euro still lacks enough momentum to succeed in that.

The last retracement to the highest resistance level 1.0605. The clear contrast in the future of monetary policy tightening between the US Federal Reserve and the European Central Bank continues to support the bearish trend.

A day after endorsing Ukraine’s candidacy to join the European Union, the bloc’s leaders on Friday turned their attention to severe economic turmoil looming over the coming months as the full impact of the Russian war recedes and the threat of recession grows. So, the 27 EU leaders gathered in Brussels to confront rising inflation, energy shocks, waning business and consumer confidence, and mounting budget pressures. Leaders will also have to contend with higher borrowing costs as the European Central Bank prepares to raise interest rates for the first time in 11 years to counter wild price increases. European Central Bank President Christine Lagarde, who plans to raise interest rates next month and again in September, joined an EU summit to discuss the bleak economic outlook.

“We are in a difficult situation,” Swedish Prime Minister Magdalena Andersson said on her way to the summit. and “It is very important that we have this discussion.” The European Union has spent the past decade battling a series of crises, from Greece’s financial woes and the transatlantic trade turmoil under former US President Donald Trump to Brexit and the COVID-19 pandemic.

The European Commission, the European Union’s executive arm, on Friday announced plans to issue 50 billion euros ($52.7 billion) in EU bonds to aid member states between July and December as part of a pioneering economic recovery program. With no end in sight to the war in Ukraine, the European Union committed to toughening sanctions against Russia as a sanction, the bloc must combat economic threats on multiple fronts.

Energy is a major challenge for the European Union, which for years has relied heavily on oil, natural gas, and Russian coal to help power cars, factories, heating systems and power plants. Under pressure to keep up with US and British sanctions against Russia, the European Union since April has expanded what was already unprecedented by targeting Russian fuel. A ban on Russian coal imports will start in August and a ban on most oil from Russia will be implemented in phases over the next eight months.

Meanwhile, Moscow itself is disrupting natural gas deliveries, which the EU has not included in its own sanctions for fear of seriously harming the European economy. Before the war, the bloc got about 40% of its gas needs from Russia.

Already, Moscow has reduced gas supplies to five EU countries, including heavy importers Germany and Italy, and cut shipments to six member states, such as Finland. Accordingly, last Thursday, Germany launched the second phase of a three-phase emergency plan for gas supplies, saying that the country was facing a “crisis”. Weaknesses in Germany, Europe’s largest economy, risk having a spillover effect making the latest EU economic growth forecasts look very rosy.

In May, the European Commission said that the EU’s economic output would grow by 2.7% this year and 2.3% in 2023 after growth of 5.4% in 2021. Other forecasts have already lowered growth forecasts. At the start of this year, the bloc was still facing the effects – including a rising budget deficit – from the pandemic, which caused the economy to contract 5.9% in 2020.

For its part, the European Central Bank pledged to create a market pillar to protect the 19 countries that share the euro currency from market turmoil while tackling record 8.1% inflation. The selling of bonds from some euro countries was a central feature of the debt crisis a decade ago.

EUR/USD analysis:

Despite the recent rebound attempts, the general trend of the EUR/USD is still bearish, and the return of stability below the 1.0500 support level will support the bears to launch further lower. The next support levels for the pair will be 1.0425 and 1.0380, respectively. The last level is sufficient to push the technical indicators towards oversold levels. However, the Euro still lacks sufficient momentum to break out of the current trend.

A technical exit may occur if the currency pair moves towards the resistance levels 1.0685 and 1.0800, respectively. The Euro is not awaiting important and influential data today. From the US, durable goods orders and US pending home sales will be announced.

DOGE/USD is trading above 6 cents in early trading this morning.  This value is far better than the ratio demonstrated this past weekend, when Dogecoin moved slightly below the 5 cents level during the massive selloff which hit the entire cryptocurrency market. Yesterday’s trading produced a late short-term high for DOGE/USD when it was able to briefly flirt with the 7 cents mark. Since hitting this juncture, DOGE/USD has traversed lower with its movement essentially mirroring the results of other cryptocurrencies.

While speculative bulls certainly welcomed the reversal higher demonstrated the past couple of days in DOGE/USD, skeptical sellers have likely been wondering if and when the bearish trend will reignite.  DOGE/USD remains locked within a steep downward cycle which has not been able to generate much upside movement for sustained durations, except for the occasional bursts higher allowing some traders to try and take advantage of perceived support levels and bet on temporary pushes upward.

Traders need to remain alert when they wager on DOGE/USD. Considering the notion that DOGE/USD was trading near the 5 cents level on Saturday and it came within sight of the 7 cents juncture yesterday, risk management considerations need to be made accordingly. Moves of twenty percent in one day are not for the weak of heart. Stop loss and take profit orders are urged for speculators who want to wager on Dogecoin.

The move higher the past two days raises the potential for a return to the bearish momentum which has been demonstrated for a long time.  The broad cryptocurrency market has not been able to hold onto its gains the past twelve hours and an erosion of values. Important short term support levels are in clear sight, if DOGE/USD were to suddenly challenge the 6 cents levels it would not be a shock. Traders do have to accept the fact that positions in DOGE/USD are a pure wager.

DOGE/USD has produced a polite rally higher in the past two days of trading, but its recent downturn may raise the suspicion that selling pressure is again about to be displayed within the cryptocurrency. Traders willing to bet on a lower move may be making the logical choice, but they need to use careful risk taking tactics. Entering positions with DOGE/USD should be done with entry price orders and speculators need to be cautious.

Dogecoin Short-Term Outlook

Current Resistance: 0.06669000

Current Support: 0.06060000

High Target: 0.07100000

Low Target: 0.05337000

There is a possibility that the pair will resume the bullish trend as buyers target the key resistance at 1.0600.

Bullish View

• Buy the EUR/USD pair and set a take-profit at 1.0600.
• Add a stop-loss at 1.0430.
• Timeline: 1-2 days.

Bearish View

• Set a sell-stop at 1.0445 and a take-profit at 1.0385.
• Add a stop-loss at 1.0500.

The EUR/USD price retreated as the strength of the US dollar continued following last week’s Federal Reserve interest rate decision. It is trading at 1.0493, which is about 1% below the highest level last week.

US Dollar Strength

The EUR/USD pair declined after the Fed decided to continue hiking interest rates in a bid to fight inflation. The bank decided to hike interest rates by 0.75%, the highest increase in almost 30 years. The Fed is also continuing with its quantitative tightening policy.

Still, data published recently showed that the country’s economy is weakening. Building permits and housing starts continued dropping in May. Other numbers like the country’s pending and new home sales have all crashed in the past few months. This trend will likely continue as the cost of home buying continues rising. Last week, the average mortgage rate in the US jumped to a multi-year high of over 6%.

The EUR/USD is also retreating as investors react to the challenges facing the European economy. Last week, Russia decided to slash the flow of natural gas to some European countries like France and Italy. And now, Germany is making contigency measures to deal with a potential supply cut.

Therefore, there is a likelihood that consumer prices will continue rising in the coming months. Data published on Friday showed that the bloc’s consumer inflation surged to a record high of 8.1% as the cost of energy continued rising. Core inflation, which excludes the volatile food and energy prices, also kept rising.

The next key catalyst for the EUR/USD pair will be speeches by ECB officials. Members like Christine Lagarde, Chief Economist Philip Lane, and Fabio Panetta will talk on the bloc’s monetary policy. The pair will, nonetheless, have minimal movements since US markets will be closed on Monday.

EUR/USD Forecast

The EUR/USD pair is under pressure as European and American bonds continued having a sell-off. The pair has moved below the 50-day moving average and the important key resistance level at 1.0630. This level was the lowest price on June 1st. Further, it is below last Thursday’s high of 1,0600.

The pair’s Relative Strength Index (RSI) has moved slightly above the neutral point at 50. There is a possibility that it will resume the bullish trend as buyers target the key resistance at 1.0600.

EUR/USD will likely resume the bearish trend ahead of the Fed decision.

Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.0522.
• Add a stop-loss at 1.0350.
• Timeline: 1-2 days.

Bearish view

• Set a sell-stop at 1.0420 and a take-profit at 1.0350.
• Add a stop-loss at 1.0500.

The remarkable EUR/USD sell-off accelerated as volatility in the financial market spread. The pair dropped to a low of 1.0430, which was the lowest point since May 17th. It has been in a strong sell-off since the ECB decision on Thursday last week.

Market volatility surges

The EUR/USD pair declined sharply as the strength of the US dollar conntinued. The dollar index surged by over 0.72% while the closely watched CBOE volatility index rose by over 20%.

At the same time, the stock market continued falling, with the Dow Jones falling by more than 700 points. This means that the blue-chip index has fallen by more than 1,800 points in the past three trading days. The S&P 500, Nasdaq 100, and Russell 2,000 have also plummeted.

The main catalyst for the EUR/USD sell-off is the fact that the American labor market has tightened while consumer inflation has surged. The unemployment rate is hovering near its record low while the overall rate of inflation has surged to the highest level since 1981.

Therefore, analysts believe that the Federal Reserve will be more hawkish in its battle against inflation. Most analysts believe that the Fed will hike by 0.50% on Wednesday. Some expect that the bank will surprise the market by hiking rates by 0.75%.

The EUR/USD pair will react to the latest consumer inflation data from Germany. Analysts believe that the country’s consumer inflation rose to 7.9% in May while the harmomised inflation rose to 8.7%. If accurate, these will be the highest point in decades,

Another important data will be the Euro area industrial production data. Analysts expect the data to show that the sector declined in April as the cost of doing business jumped.

EUR/USD forecast

The EUR/USD pair continued its bearish trend as the dollar strength continued. The pair dropped to a low of 1.0420, which was significantly lower than its month-to-date high. It has moved to the lower side of the Bollinger Bands. The pair moved below the 25-day moving average while the Stochastic Oscillator moved below the oversold level.

The pair will likely have a relief rally as bulls target the key resistance level at 1.0522. In the longer term, the pair will likely resume the bearish trend ahead of the Fed decision.

During the middle of this week’s trading, the British pound tried to recover its recent losses against the dollar, the euro, and all other major currencies. There was no clear motive for the advance but improving global investor sentiment during the US stock trading session may have helped the British Pound leaning towards gains under these conditions. However, a look at the pound’s performance shows a clear outperformance which suggests some real individual demand for the British currency. In the case of the GBP/USD currency pair, it rebounded to the 1.2599 level, and the pair kept looking for catalysts to complete the rebound, but the situation may remain cautious until the US inflation numbers are announced tomorrow. This will paint a picture of the currency pair’s trading closing for this week.

In fact, it was not only the G10’s periphery that Sterling outperformed, as gains were also recorded against some of the major names in Asia, emerging markets, and Eastern Europe. Thus, the broad nature of the advance cannot be explained by broader risk trends as there are some currencies which will almost certainly advance against Sterling if global sentiment is in the driving seat.

The gains come amid scarcity of first-order event risks for the pound, although it saw some volatility during Monday and Tuesday as global stock markets fluctuated and political intrigue was on display in the form of a vote of no confidence in British Prime Minister Boris Johnson.

However, sterling could come under pressure against the euro on Thursday if the European Central Bank indicates that a 25 basis point rate hike in July will occur in July while also confirming market expectations of a potential 75 basis point hike over the remainder of the year.

Investors are now largely anticipating such moves, and therefore they should not introduce much volatility to the Euro. However, forex currency analysts are watching for any indication that the ECB may “advance” and raise by 50 basis points at one of the upcoming meetings, believing that a more traditional 25 basis point hike is not enough given the scale of eurozone inflation.

This could set the Euro on fire and push the GBP/EUR exchange rate lower over the weekend. The Bank of England will then focus on June 16, when it will likely raise rates by another 25 basis points.

The UK rate hike comes amid rising UK inflation and a slowing economy, which are contradictory forces that don’t necessarily provide a supportive mix for the pound. Accordingly, Elias Haddad, senior currency strategist at the Commonwealth Bank of Australia, says: “The biggest issue for UK financial markets right now is the country’s move into stagflation. This will keep UK real yields very negative and mean that sterling will be trading at a significant discount to the underlying balance for some time.”

However, new research from investment bank Investec has found that “the UK’s overall outlook may be overblown” and they expect the pound to rebound over the coming months as a result. The global lender and financial services provider says that although they cut their forecasts for UK economic growth for 2022 and 2023, they do not believe a UK recession is inevitable.

Instead, the robust wage dynamics and savings spending collected during the Covid pandemic will provide a cushion to the economy during the “cost of living crisis.” “Some pessimism in the UK’s overall outlook may be overstated,” says Philip Shaw, chief economist at Investec in London. “Momentum in wages and employment is strong, and so is the store of high savings.” And Shaw adds: “We are still looking for the pound to rise, especially against the US dollar.” And “from a currency perspective, we see the most likely scenario is that the pound will rebound after its weakness since the beginning of the year.”

Accordingly, Investec expects the GBP/USD exchange rate to trade at 1.30 at the end of 2022 and 1.37 at the end of 2023. Investec expects the EUR/GBP to trade at 0.85 at the end of 2022 and 0.84 at the end of year 2023.

According to the technical analysis of the pair: By observing the recent performance of the GBP/USD currency pair, we find that the attempts to rebound upwards lack the momentum to get out of the vicinity of the current general bearish trend. It is the closest to returning to the 1.2480 support level, which motivates the bears to move further downwards. As I mentioned before, the sterling dollar will not have the strongest opportunity for a trend reversal without breaching the 1.3000 psychological resistance.

Today’s economic calendar is devoid of important British economic data, only the US jobless claims will be announced.

The gains of the GBP/USD currency pair may be subject to a rapid collapse, as political anxiety remains in Britain. Renewed concern about the Brexit agreement, along with the pessimism of the Bank of England, is offset by the intention of the US Federal Reserve to raise the interest rates in America strongly during the year 2022. Yesterday, the price of the GBP/USD currency pair has been subjected to selling operations that settled in its impact towards the support level 1.2430 at the time of writing the analysis.

The pound against the dollar has entered the new week’s trading and may struggle to fend off the dollar’s rally ahead of the important US inflation numbers on Friday for the month of May, which may be key to see if the British pound is able to do so. Avoid retesting last month’s lows. The British pound attempted to recover from an earlier drop below the 1.25 level during the weak holiday period late last week but was held back by the dollar’s rebound after US payroll and PMI numbers confirmed continued upside risks to the Fed’s policy outlook.

While jobs data and industrial surveys clearly indicated that momentum in the labor market and other key economic sectors in the US is slowing, they also made it clear that risks to the US inflation outlook remain to the upside. This, in turn, suggests that the Fed will continue to have room to push higher expectations on US interest rates in the coming months, which could represent additional headwinds for the pound against the dollar, if not a direct burden on the pound.

Wage growth detailed in Friday’s US payroll report eased slightly, but both PMI surveys indicated that demand for workers was still rising along with their demands for wages and some other prices, which came as headwinds for the pound against the dollar. This may be because these are all things that could drive inflation along the line and therefore likely cause the Fed to be more interested in continuing to raise rates in larger than usual increases for the rest of the year.

According to the technical analysis of the pair: On the daily chart, if the GBP/USD price returns below the 1.2385 support, the bears will return to control the trend and the recent bullish expectations will end. Breaking this support will return the expectations of the collapse to the psychological support 1.2000 again. On the other hand, the bulls must break through the resistance levels 1.2675 and 1.2800 to give the bullish expectations a boost, and I still prefer to sell the GBP/USD from each ascending level.

With the beginning of this important week’s trading, the price of the EUR/USD currency pair continues to maintain the recent rebound gains that pushed it towards the 1.0765 resistance level. The rebound gains were in the first place with momentum from the statements of the monetary policy officials of the European Central Bank led by Governor Lagarde. These statements said the bank is ready to move interest rates as soon as possible, as they set the July meeting to be the earliest date for that.

The gains of the euro-dollar pair stopped in recent sessions until it obtains additional strong momentum, as the US dollar still has strength factors that caused the currency pair to fall to its lowest level in five years. The measure of US inflation that the Federal Reserve closely follows rose 6.3% in April of the previous year, the first slowdown since November 2020 and a sign that higher prices may finally moderate, at least for now. The Commerce Department’s inflation figure on Friday was lower than a four-decade high of 6.6% set in March. While high inflation continues to cause hardships for millions of families, any slowdown in price increases, if it continues, will provide some modest relief.

The report also showed that consumer spending rose at a healthy annual rate of 0.9% from March to April, outpacing the monthly inflation rate for the fourth time in a row. The constant willingness of the country’s consumers to continue spending freely despite price inflation helps sustain the economy. However, all that spending helps keep prices high and could make the Fed’s goal of curbing inflation more difficult.

At the same time, consumers’ resilience in the face of sharply higher prices points to a recovery in economic growth in the current April-June quarter. The US economy contracted at an annualized rate of 1.5% in the first quarter, mostly due to a widening trade deficit. But analysts now expect that, on an annual basis, it will grow by as much as 3% in the current quarter. Americans have been able to keep spending, despite rising inflation, due to rising wages, the buildup of savings stocks during the pandemic, and the boom in credit card use. So, economists say, these factors could boost spending and support the economy for most of this year.

For his part, US Central Bank Chairman Jerome Powell pledged to continue raising the main short-term interest rate of the Federal Reserve until US inflation drops in a clear and convincing manner.

According to the technical analysis of the pair: On the daily chart, the recent gains of the EUR/USD pair, caused the direction of some technical indicators to move to the upside. It turned to the upside strongly, and the currency pair crossed the resistance levels of 1.0795 and the psychological top 1.1000, respectively. The EUR/USD currency pair is still at the beginning of breaking the descending channel and is currently in need of more momentum. I expect calm movements for the currency pair today due to the American holiday, which weakens liquidity and investors’ appetite for adventure.

On the downside, breaking the 1.0560 support level will end the current bullish expectations.

Despite the attempts of an upward correction in the price of the GBP/USD currency pair, analysts warn that the pound is set for a summer of weakness against the euro, the dollar, and other major currencies. The British economy suffers from deflation and the Bank of England abandons its cycle of raising interest rates.

Accordingly, most analysts expect the Pound to remain under pressure against the US Dollar and the GBP/USD which could lead to a test of the 1.20 level, or even a drop below it. They also say that the pound’s rally against the euro may be over by now, which means that the pound-to-euro exchange rate’s peak at 1.2188 in March was a milestone.

This leads to a crude turn of events for those hoping to sell sterling; The British currency is already recording a loss of 1.86% against the euro for 2022, while losses against the US dollar are 7.40%.

Sentiment towards the sterling took another big hit this week after data out of the UK showed economic activity deteriorated significantly in May. The S&P Global Composite PMI for May came out at 51.8, lower than expected at 56.5 and 58.2 in the previous month. Such a sharp month-to-month drop is almost unprecedented: the monthly loss of momentum in May was the fourth largest on record and surpassed anything seen before the pandemic.

Bilal Hafeez of Macro Hive says in a recent market commentary for CME Group. Fundamentals still point to sterling weakness: “High inflation, very cautious BoE and global risk aversion could see further sterling weakness”,

Data from the Office for National Statistics showed that CPI measures of inflation reached 11.1% in April and 9% on the CPI scale. Accordingly, Hafeez says: “These are among the highest rates of inflation in the developed world.” It also means that UK CPI inflation has now exceeded the US average (8.3%) for the first time since mid-2020, he says.

From a forex market perspective, the policy response between the Bank of England and the Fed is significant.

The Federal Reserve is “increasingly hawkish and ready to push the US economy into recession, while the Bank of England is moving on fears that the UK economy is slowing too much. As a result, the Fed is expected to raise rates by 100 basis points in its next two meetings in June and July, while the Bank of England is only expected to raise cumulatively by 70 basis points at its June and August meetings.”

Macro Hive expects the BoE to likely pause and reassess the situation with its updated August monetary policy report forecast. Even the European Central Bank is sending more “hawkish” signals after President Christine Lagarde warned this week that interest rates will rise in July and again in August.

“As the market reacts to Christine Lagarde’s ECB policy roadmap, it is a lot easier to see sterling as the weakest currency in Europe,” says Kit Juckes, Head of FX Research at Société Générale. The pound is now “the weakest currency in Europe,” Gokes says, adding that the market is lagging behind buying the euro and selling sterling as an “easy default” to the recent ECB policy change.

According to the latest data, UK consumer confidence is now at an all-time low according to GfK metrics, despite the tightening labor market. Moreover, other economists argue that the British economy should avoid such a disastrous outcome if employment remains strong. According to the forecast for GBP/USD, Hafeez says: “These factors together could lead to the GBP/USD pair resuming its weak trend and touching its 2019 low at 1.20 in the coming months.”

According to the technical analysis of the pair: On the daily chart below, the price of the GBP/USD currency pair is still at the beginning of breaking the descending channel. It still needs to breach the 1.3000 psychological resistance to confirm the strength of the break. The pair is still under pressure from the pessimism of the Bank of England and weak results The recent British economic data, on the other hand, the US Federal Reserve, which is more tightening, and the US data with good results support that.

The closest support levels for the Sterling Dollar today are 1.2480 and 1.2390, and the last level threatens the current bullish correction attempts. The pair will react strongly today with the announcement of the growth rate of the US economy, the number of weekly jobless claims, and the complete absence of Britain’s data.

The British pound succeeded in achieving gains against the euro and the dollar after the release of British labor market statistics that revealed a strong jump in wages and a larger-than-expected drop in unemployment. In the case of the GBP/USD currency pair, it moved towards the resistance level of 1.2498. It rebounded from its lowest level in two years, when it tested the support level of 1.2155 last week, amid the collapse of the price of sterling in the forex market amid the sharp pessimism of the Bank of England.

According to official figures, the United Kingdom added 83,000 jobs in the three months to March, the Office for National Statistics said, far more than the 5,000 jobs the market was looking for. The unemployment rate unexpectedly fell to 3.7% from 3.8%, a 50-year low. Average wages, including bonuses, rose 7.0% in March, well above the 5.4% that the market was looking for.

The data was stronger than the markets had expected and will continue to pressure the Bank of England to continue raising interest rates.

This is because a “tight” labor market – one in which unemployment is low but demand for workers is strong – of the kind seen in the UK will continue to put pressure on wages, which in turn will drive up inflation. The bank can’t simply stand back and do nothing in the face of this kind of data.

The data risks making the Bank of England’s outlook for the economic outlook too pessimistic. Bank Governor Andrew Bailey told members of Parliament’s Treasury Committee on Monday that the bank continues to expect unemployment to rise in the coming months as the effects of the slowdown in the economy become more felt. The assumption is that inflation – which the bank expects to rise to 10% – will eventually cause economic growth to stall as consumers are forced to become more conservative.

This is expected to lead to higher unemployment, so the bank said that limited increases in interest rates are needed from here. This contrasts with a market that still expects about 100 more basis points of gains in 2022 alone. Given the recent labor market data, it may be the bank that has to move toward market expectations.

This ultimately supports the pound sterling.

Commenting on this, Ricardo Evangelista, chief analyst at ActivTrades said, “The British pound is benefiting from the surprisingly positive data released recently, with both unemployment and wages figures beating expectations, painting a more positive picture of the UK economy than expected. Against this background, expectations of the Bank of England’s intervention – an increase in the pace of monetary policy tightening – have risen; With inflation data expected today to top 9%, Bank of England officials will have little choice but to continue raising interest rates, creating scope for further pound gains.”

He added that the number of job vacancies in February to April 2022 rose to a new record high of 1,295,000; An increase of 33,700 from the previous quarter and an increase of 499,300 from the pre-coronavirus pandemic level in January-March 2020. In January-March 2022, the ratio of unemployed to each vacancy remained at 1.0 and for the first time the number of vacancies was greater than the number of vacancies Unemployed people, according to the Office for National Statistics.

This suggests that the UK labor market will remain strong for some time now, even in the face of rising inflation.

However, much of the labor market’s “tightness” is a symptom of a troubled workforce due to a number of factors, including fewer EU citizens coming to the UK to work, long-term sickness rates after Covid and older workers who offer Retirement plans after the pandemic. Rising inflation will prompt more people to look for work again as income levels are reassessed. Falling stock markets and falling cryptocurrency values ​​will also cause more people to return to the workforce.

According to the technical analysis of the pair: According to the performance on the daily chart below, and despite the attempts to rebound, the general trend of the GBP/USD pair is still bearish. Over the same period of time, there will be no reversal of the trend without breaching the 1.2848 resistance levels and the psychological top 1.3000, the boundary between recovery and continuing the current bearish trend . On the other hand, the support level at 1.2330 is still important for further launch of the bears towards the most expected psychological support at 1.2000 after that. Today, the sterling will be affected by the announcement of British inflation figures.