ONLINE FOREX BROKER
2021-08-23 • Updated
UK private sector companies experienced a sharp slowdown in output growth during August, according to the latest PMI data. Flash Manufacturing PMI performed better with 60.1 actual vs. 59.5 expected. Flash Services PMI report showed worse than expected results of 55.5 against the market's expectation for 59.0. This marks a slowdown on July's reading of 59.6. Although the latest reading was still above the crucial 50.0 level, it was the slowest expansion of output since March 2020. Because of shortages of staff and materials, output reduction was 14 times higher than usual and the largest since the survey began in January 1998.
Although the PMI indicates that the economy continues to expand at a pace slightly above the pre-pandemic average, there are clear signs of the recovery losing momentum in the third quarter after a buoyant second quarter. Rising virus case numbers are deterring many forms of spending, notably by consumers, and have grown via worsening staff and supply shortages. Therefore, prices have risen sharply again. Flash services PMI didn’t hit the expected level for the fourth time in a row, moving closer to the vital 50.0 level.
The declines in Sterling coincided with a broader sell-off in global equity markets, a deterioration that confirms EUR/GBP to be highly correlated with broader global trends. MUFG Strategist Derek Halpenny assumes that “The reason for the reversal of the EUR/GBP move lower is the increased risk-off trading conditions as COVID concerns globally increase”. However, amid weak PMI data in the UK and relatively stronger EU data, as well as rising inflation forecasts from the Bank of England (returning to 2.0% over the medium-term) and technical overview suggest that the bearish market for the euro might be over. Bullish divergence in RSI and macroeconomic conditions allude to reversal.
EUR/GBP daily chart.
Support: 0.845
Resistance: 0.86 and 0.866
The British pound had 4 out of 5 red days last week. The dollar surged amid rate hike news. However, tapering is yet to come and now overbought greenback with weak PMI data might cede for the GBP. A potential market-positive shift (for the USD) could be triggered where the Fed signals a delay to the tapering in light of rising covid cases in the U.S. and globally.
Double bullish divergence has formed and a couple of rebounds from the support line is present. All this might signal a bullish movement for the pound sterling.
GBP/USD daily chart.
Support: 1.360
Resistance: 1.370, 1.400, and 1.420
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
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