#StockMarket #BOE #Pound⠀
👉 Pound under pressure from statistics
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The markets expect the actual effect of the first BOE bank rate cut in this cycle in a few months, but so far, the UK economic data does not allow the Pound to start growing despite the weakening of the dollar.
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The most negative surprise came from industrial production: the overall index fell by 0.8%, then leveled the growth of the previous month. The manufacturing sector, critical for the British economy, showed a decline of 1.0% MoM and 1.3% YoY.
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Quite logically, the trade deficit grew – £20 bln vs. £18.9 bln in July. Expectations that falling energy prices would reduce this figure failed to materialize. The UK only had a larger monthly deficit in the first half of 2022.
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Employment statistics look positive and indicate an improvement in the overall situation in the labor market after the lockdowns of 2020 and the financial crisis of 2008. At the same time, wage growth continues to slow, but it was 4% higher in the three months from May to July than a year earlier.
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However, the weak data reinforces expectations of further policy easing. Although markets are waiting for the subsequent rate adjustment in November, the chance of such a decision as early as next Thursday is relatively high. As a rule, BOE prefers to start earlier and do less than to postpone the start and end up doing more. The stats reinforce downside risks for the Pound, but the medium-term trend is too dependent on US news and Fed policy.
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So far, speculators have used the pullback to 1.3120 resistance for quick selling, and the redemption of bullish positions on growth attempts continues. A breakdown of the 1.3000-1.2950 zone will cause a fall to the large options zone at 1.2850 and below. A break of the 1.3150 zone is needed for an upward reversal, but there is no fundamental support for such a move in the market.
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Profits to y’all!