The Pound Trying to Grow on News from Labor Market
On Tuesday morning data from the UK market were published:
→ base wage rose at a record pace in the second quarter. It was 7.8% higher than a year earlier, representing the highest annual growth rate since 2001.
→ at the same time, the number of unemployed also increased. In July, 29k applications for unemployment benefits were submitted (expected - 19.2).
The first reaction of the pound is growth. It is possible that market participants have increased fears that wage growth will give the Bank of England more grounds for a sharper increase in interest rates. At the same time, the bullish momentum faded quickly, in line with the bearish momentum that has dominated the GBP/USD market since mid-July (as shown by the black line) amid the formation of the SHS pattern.
However, the situation may change.
As the daily chart shows, the GBP/USD rate dropped to the border of the ascending channel, which is valid in 2023, and seems to have found support there — as a candle with a long lower shadow was formed yesterday. Buyers quickly snapped up the fall, showing strength of demand around the 1.266 support line, which is also being strengthened by the 100-day moving average.
The probability of a rate hike in September by the Bank of England by 0.25 points is 99%, according to Reuters. And the closer the decision is, the stronger the demand can become, which can lead to a bullish reversal from the block of supports and a breakdown of the black line.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
→ base wage rose at a record pace in the second quarter. It was 7.8% higher than a year earlier, representing the highest annual growth rate since 2001.
→ at the same time, the number of unemployed also increased. In July, 29k applications for unemployment benefits were submitted (expected - 19.2).
The first reaction of the pound is growth. It is possible that market participants have increased fears that wage growth will give the Bank of England more grounds for a sharper increase in interest rates. At the same time, the bullish momentum faded quickly, in line with the bearish momentum that has dominated the GBP/USD market since mid-July (as shown by the black line) amid the formation of the SHS pattern.
However, the situation may change.
As the daily chart shows, the GBP/USD rate dropped to the border of the ascending channel, which is valid in 2023, and seems to have found support there — as a candle with a long lower shadow was formed yesterday. Buyers quickly snapped up the fall, showing strength of demand around the 1.266 support line, which is also being strengthened by the 100-day moving average.
The probability of a rate hike in September by the Bank of England by 0.25 points is 99%, according to Reuters. And the closer the decision is, the stronger the demand can become, which can lead to a bullish reversal from the block of supports and a breakdown of the black line.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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