The UK released Inflation Rate YoY data earlier in the session, and the result came out higher than expected at 10.1%, just 0.3% above what experts anticipated; this indicates that the Pound Sterling is losing purchasing power, but the UK economy is still very active, the Bank of England is likely to continue with a Hawkish approach on the September Interest Rate Decision, we would expect BoE to continue tightening monetary policy to try to control inflation.
More high-impact economic indicators will be released by the UK this week; on Thursday, the Gfk Consumer Confidence data will be announced, which gauges the confidence in the performance of the economy for the next 12 months. On Friday, The UK will announce Retail Sales MoM with an expected decline to -0.2% from a previous of -0.1%. On the other hand, Retail Sales YoY are expected to improve but still stay within the negative range; consensus is a -3.3% from the previous -5.8%
The US released data on Retail Sales earlier today; surprisingly, the result came out 2.2% better than expected at 10.3%, straightening the USD against the GBP. On Friday, the US will release data on Initial Jobless Claims; a solid labor market in the US will continue strengthening the USD.
The currency pair lost 1.12% in the last four trading sessions; the price is trading in between the short and long-term moving averages, indicating that the markets are undecided; however, we saw a trend line cross last week, suggesting that the general trend is upwards.
The Bollinger bands are shrinking, and volatility will be lower in the upcoming trading sessions; the price might enter a consolidation period before an important breakout. The pair is trading in between the bands, suggesting that the price is at a relatively fair level.
The relative strength index is at 48%, which will give the pair enough room to move in either direction before entering an oversold or overbought status.
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