The European Central Bank (ECB) has raised interest rates by 25 basis points, marking its tenth consecutive rate hike since July 2022 and bringing the total increase to 450 basis points. The ECB is primarily concerned about high inflation levels, both current and projected, with concerns extending into the future.
Will GBP Recover Now?
2023-05-23 • Updated
The Bank of England (BoE) has dramatically shifted its economic forecasts. They no longer expect a recession in the UK and have upgraded their growth projections. This year, the BoE predicts GDP growth of +0.25%, a significant improvement from previous expectations. Next year's forecast is even more optimistic, with a projected growth of 0.75%. However, let's not get too carried away—the outlook remains subdued, with growth below 1% until 2025. The UK economy is still fragile, as evidenced by lackluster performance in the first quarter of 2023. On the inflation front, the BoE expects a decline over the year but at a slower pace than previously anticipated. Inflation is now projected to be around 5% by the end of this year and is not expected to fall below the 2% target until 2025. The recent interest rate hike suggests that further tightening may be on the horizon, especially considering the upgraded growth and inflation forecasts. So, keep your eyes peeled for potential developments in monetary policy.
GBPUSD - Daily Timeframe
From the chart above, it is clear that the price is at a key level - a pivot zone. Considering the break above the previous high, the support from the 50-Day moving average, and the arrangement of the moving averages in increasing order, I will maintain a bullish sentiment on this commodity until the price breaks below the pivot zone.
GBPAUD - H4 Timeframe
GBPAUD presents a very tricky case. We see price trading within the consolidation channel while pulling a dance between the 50-period and 100-period moving averages. We haven’t seen a touch of the resistance trendline of the channel. Hence, my argument is in favor of bullish price action. Combine that with the confluence from the trendline support and the 200-period moving average, and you will see why I expect a bullish price action.
GBPNZD - H4 Timeframe
The moving averages on GBPNZD signal an overall bearish market, but it is good to scalp a few bullish pips in between. My bullish sentiment is based on the confluence of the trendline support and the pivot zone - maybe not be a strong argument, but I will be watching for a clear reaction from the pivot zone as my entry cue.
GBPJPY - Daily Timeframe
This pivot zone on GBPJPY can be traced to the Monthly timeframe. The zone has also been retested a few times - serving as an area of liquidity grab from the previous high. In this scenario, as in the case of GBPNZD, the confluences seem scanty - making it a daring trade. That is why my entry will be timed to follow a notable reversal candlestick pattern, without which I wouldn’t bother taking a trade on GBPJPY at all!
The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.
You can access more of such trade ideas and prompt market updates on the telegram channel.
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.
The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.
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.