#worldnews #StockMarket #pound ⠀
👉 The pound is not ready for surprises⠀
The market still does not pay any attention to the global news and gives only short-term reactions. The
pound sterling has been rising for two months now, although there are no serious reasons for it. Perhaps tomorrow the BOE will manage to put the brakes on this strange rally.
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The market continues to hate the dollar. The last two US inflation reports, which showed a minimal slowdown of 0.1%, triggered near collapses in the US currency. At the same time, when British inflation fell by almost 1%(!!!) at the end of April, the
pound managed to rise in all market assets.
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The UK inflation report will be published today, but if anyone thinks a drop in British inflation to 2% or below will trigger a
pound collapse, we highly doubt it. However, this report will help gauge the likelihood of BOE easing monetary policy in the near future.
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According to the consensus forecast, tomorrow BOE will keep rates and will not risk changing them, at least until the parliamentary elections in the UK, so as not to affect the result of the vote But unpleasant surprises for the
pound in the form of comments from British monetary officials cannot be ruled out.
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Now, we should be extremely careful with any positions on the British currency because there are no grounds for confident purchases, and it is dangerous to sell because the market ignored the fundamental and macroeconomic background for two months. But even just within the correction, the British currency still has room to grow, and if inflation in the UK slows down weaker than forecasts, the growth of GBP/USD above the zone of 1.3000/20 will be very likely.
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A breakdown of the support at 1.2600-1.2550 could create conditions for a fall to 1.2470. Still, for this, the BOE will have to lower interest rates and signal its intention to continue easing monetary policy. And the British regulator is not ready for this.
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So let's behave reasonably and don't forget about risks.
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Profits to y’all!