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While the Federal Reserve and the European Central Bank talk about their expectations regarding interest rates, inflation levels and the timing of the rollback of quantitative easing programs, the Bank of England has moved from words to actions. After inflation in the United Kingdom jumped to 5.1%, the British central bank decided not to wait for next year, which was scheduled for the first in a long time refinancing rate hike, and raised it. As a result of yesterday's meeting, it increased from 0.10% to 0.25%. Which came as a complete surprise to the markets. As a result, the pound began to grow actively. Largely because of the complete surprise.
Refinancing rate (UK):
After this, it does not matter at all that the preliminary assessment of the business activity indices in the UK showed simply horrific results. The business activity index in the manufacturing sector fell from 58.1 points to 57.6 points, against the forecast of 57.4 points. But this is the only thing to be glad about. After all, the index of business activity in the service sector, which should have dropped from 58.5 points to 57.6 points, fell to 53.2 points. As a result, the composite business activity index fell from 57.6 points to 53.2 points, although it was expected to decline to 56.5 points.
Composite PMI (UK):
In all fairness, it should be noted that apart from preliminary estimates of business activity indices, US statistics were extremely positive. In particular, the growth rates of industrial production remained unchanged. Although they were predicted to slow down from 5.3% to 5.0%. Also, the number of initial applications for unemployment benefits, which should have grown by 27,000, increased by 18,000. The number of repeated applications decreased by 154,000, while at best they expected a decrease by 84,000. Regarding business activity indices, then in the service sector it decreased from 58.0 points to 57.5 points, while it was expected to grow to 58.2 points. The manufacturing index, which was also supposed to grow, only from 58.3 points to 58.5 points, fell to 57.8 points. So it is not surprising that the composite PMI, instead of rising from 57.2 points to 57.4 points, dropped to 56.9 points.
Industrial Manufacturing (United States):
Surprisingly, after two days of relentless gains, the pound has a good chance of rising even higher. The reason for this will be retail sales, the decline of which, by 1.3%, should be replaced by an immediate growth of 3.6%. And this is according to the most conservative forecasts.
Retail Sales (UK):
The GBPUSD pair demonstrates to the market all the power of speculation due to the BoE's unexpected decision. As a result, the quotes jumped locally by more than 65 points in just a minute. After that, the excitement subsided and the upward momentum was replaced by stagnation, followed by a rollback.
The technical instrument RSI in the four-hour period for the first time since October reached the overbought level, in the area of which was just a stagnation.
On the daily chart, there is a downward trend as before, where the recent upward momentum has not broken the clock component of the trend in any way.
Expectations and prospects:
There are still a large number of speculators on the market who, due to their unpredictability, can provoke new price jumps. In this case, long positions will be relevant above the value of 1.3375, which will most likely lead to a breakdown of the level of 1.3400. Traders can consider a downward trend scenario if the price stays below 1.3290.
Comprehensive indicator analysis gives a buy signal based on short-term and intraday periods due to price convergence from the upper flat border. In the medium term, technical indicators signal a sell-off due to a downtrend.
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