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.
How will Sunak's Election Affect the Pound?
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.
What to expect?
"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.
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.
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