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market analysis
The pound is lingering at 1.33. Is the sudden market coming soon?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The pound is hesitating at 1.33, is the sudden market trend www.xmh100.coming in front of you?" Hope it will be helpful to you! The original content is as follows:
On Wednesday (August 6), the pound/dollar fluctuated narrowly near the 1.3300 mark, and the exchange rate sideways consolidation state continued for several days, and the market entered a typical waiting mode before news. Traders' focus is on two major events this week: the Bank of England's interest rate decision and potential policy direction changes brought about by personnel changes in the Federal Reserve.
Brands:
For the Fed, as Kugler resigned last Friday, U.S. President Trump said he would appoint his successor within this week. The market is widely expected that the appointment will strengthen its influence on the Federal Open Market www.xmh100.committee (FOMC) or intensify concerns about the independence of the Federal Reserve. Trump publicly stated that the candidates include White House economic adviser Kevin Hassett and former Federal Reserve Director Kevin Warsh. This move has caused the market to expect the Federal Reserve's policy to become more relaxed, thus posing certain pressure on the US dollar.
In terms of U.S. economic data, the July non-farm data (NFP) was significantly lower than expected, while the May and June data were both revised downward, and the unemployment rate also rose, strengthening expectations for a rate cut in September. According to the CMEFedWatch tool, the market is almost certain that the Fed will lower the federal funds target rate by 25 basis points at its September meeting to the 4.00%-4.25% range.
For the pound, the Bank of England will announce its interest rate decision this Thursday. The market generally expects to lower interest rates by 25 basis points to 4%, which has been fully included in the price. The key variable is whether the central bank sends more dovish or hawkish signals, especially forward-looking judgments on inflation and the job market.
Although the UK CPI canSource and food prices have risen but remain high, but official data shows that the employment market has declined, the burden on social insurance costs of enterprises has increased, and recruitment has slowed down. On the finance side, the hike of welfare spending by Chancellor Rachel Reeves also boosted inflation expectations. Central Bank Governor Bailey has recently spoken in a mild tone, saying that the risk of inflation returning to the 2% target in the medium term has "dissipated".
Technical:
The GBP/USD shows a relatively clear "sidency consolidation after a downward trend" structure on the 4-hour chart. After the rapid decline of the 1.3588 high, the exchange rate formed a stage low point near 1.3140 and stopped falling and rebounded. It is currently oscillating around the Bollinger Band middle track (1.3265).
The Bollinger Band shows a mild closing trend, indicating that the volatility has converged and the market is in the stage of consolidation and accumulation. The current price is near the middle rail, trying to break through the upper rail of 1.3346 of the Bollinger band, but it has never achieved an effective breakthrough, indicating that there is obvious resistance at the 1.3346 line. The lower support is located at 1.3185 (botrynne's lower rail) with the front low of 1.3140.
In terms of MACD indicators, the MACD line is slightly higher than the signal line, and the red bar chart is enlarged, indicating that the short-term kinetic energy begins to become stronger, but the upward action energy is still relatively mild. The RSI remained at 53.38, indicating that the market is in a neutral and bullish range and has not entered an overbought or oversold state, implying that there is still room for two-way choice for the price.
Overall, analysis believes that the technical side shows that the exchange rate is in a consolidation market, and the upper and lower tracks have not yet broken through, so we need to be wary of the upcoming sudden market. Once 1.3346 breaks through and stands firmly, it may trigger further rebound space; on the contrary, if it falls below 1.3185, it will become possible to fall below 1.3140 again.
Prevention of market sentiment:
The current market sentiment is cautious and wait-and-see, and the exchange rate repeatedly tug-of-warrants around the psychological mark of 1.3300, indicating that both bulls and bears lack sufficient confidence to launch an attack. In the US dollar, due to Trump's upcoming important personnel appointments and high expectations for a rate cut in September, the US dollar index continues to hover at a low level, which poses indirect support for the pound.
On the other hand, the market remains cautious about the Bank of England's interest rate decision this week. Although interest rate cuts have basically become a consensus, the uncertainty of future policy paths still poses differences on market expectations. Some traders bet that this round of interest rate cuts is the end of the cycle, and the pound may usher in phased support; there are other views that the central bank may continue to send dovish signals to suppress the mid-term trend of the pound.
In terms of emotional indicators, RSI, MACD, etc. have not formed obvious divergence or extreme signals. www.xmh100.combined with the Bollinger Band closing pattern, it means that a directional breakthrough may be ushered in the short term, and market risk preferences need to trigger event stimulation.
Future Outlook:
Before the Bank of England’s resolution and the Federal Reserve’s personnel are implemented, the exchange rate may remain fluctuating and consolidating within the range of 1.3185–1.3346. Analysts believe that if the central bank's tone is biased, the pound will face certain downward pressure in the short term, and the exchange rate may be measured.Try the key support of 1.3140;
On the contrary, if the Bank of England releases hawkish signals and inflationary pressure is covered by strengthening expectations, or if the Fed's personnel orders are unexpectedly neutral, the pound may rebound technically, and the target is above 1.3400.
The above content is all about "[XM Foreign Exchange Market Analysis]: The pound is 1.33 lingering, is the sudden market trend www.xmh100.coming in front of you?" is carefully www.xmh100.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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