The last week was met with optimism and belief in the inevitability of the beginning of a correction. The reason for the correction was the results of the meeting of the Bank of England on monetary policy, as it was expected that the regulator would raise the refinancing rate from 0.5% to 0.75%. However, just a couple of days before the meeting, the mood changed drastically, as a number of representatives of the Bank of England made it clear that the refinancing rate will not be raised until now. What will happen in the end? The pound has nowhere to fall. The dollar is so heavily overbought that you need to defuse the situation somewhat. The decision of the Bank of England greatly disappointed market participants that they did not even pay attention to the acceleration of industrial production growth rates in the UK from 2.1% to 2.9%. At the same time, investors did not react to the acceleration of inflation in the US from 2.4% to 2.5%, which indicates the depletion of the possibility of further dollar growth.
This week, British statistics itself will not be able to contribute to the dew of the pound. The fact is that, despite the stability of the unemployment rate, not the best salary data is expected. Although the growth rate of wages should accelerate from 2.6% to 2.9% taking into account premiums. Their growth rates may remain unchanged. When salaries without premiums grow faster than premiums, this negatively affects the mood of investors, as it has a negative impact on the potential profit of companies.
Strangely enough, it is the US statistics that can cause a weakening of the dollar. Although inflation has increased, the growth rate of retail sales should slow from 4.5% to 4.1%, which significantly exceeds inflation. Such weak data on retail sales will have a serious impact on the dollar, and even the acceleration of industrial production growth from 4.3% to 4.5% will not be able to mitigate the negative.
So, by the end of the week, the pound may rise in price to 1.3675.