2022-10-25 • Updated
On Monday, October 24, Rishi Sunak was elected the new UK Prime Minister. After the significant failure of the previous Prime Minister Liz Truss, whose plan for tax cut dumped the GBP and bond markets, a new PM has to find ways to return international investors' trust in the UK economy and slow down the inflation growth.
"Difficult decisions await us next", - Sunak said at the first press conference as Prime Minister of Great Britain.
In our view, Sunak will take tough steps against inflation in the first days of work. On November 3, the Bank of England will decide whether it will raise the key rate by 50- or 75-basis points. Despite its formal independence, the BOE might choose a more hawkish scenario for the key rate, strengthening the GBP against other currencies.
EURGBP, H4 timeframe
EURGBP bounced off the descending trend line, highlighting the pair's weakness. We expect the price to keep declining toward 0.8625, 0.8580, and 0.8540.
Traders might consider selling the pair if the price touches the resistance trend line once again or after the price breaks below 0.8660.
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
Emerging market countries, including the BRICS bloc, are expressing frustration with the US dollar's dominance in the global financial system. While there have been discussions about creating alternative currencies to challenge the dollar's dominance, no concrete proposals have emerged. Instead, these countries are considering expanding trade using their own currencies to reduce reliance on the dollar.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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