At the beginning of the week, the UK upwardly revised forecasts for the unemployment rate. Initially, analysts foresaw a rise to 4.6% from 4.5%. Later, they had expected that the indicator would remain unchanged. In fact, the unemployment rate declined to 4.3%, surprising everyone. Against such a background, the pound sterling began gaining in value.
UK Unemployment Rate
US statistics also beat the forecast. Thus, a rise in retail sales should have dropped to 12.0% from 13.9%. Then, analysts upwardly revised the forecast to an increase to 14.3%, thus supporting the greenback. When the report unveiled a bigger jump of 16.3%, the US dollar immediately began gaining in value. An hour later, the rally was supported by the industrial production data. Economists had predicted slower growth of 3.9% compared to 4.6% in the previous period.
In fact, the indicator's rise accelerated to 5.1%. It means that the US economic growth is becoming faster. The better than expected figures prevented the pound sterling from a decline, allowing it to return to the levels recorded at the beginning of the day. At the same time, other currencies were rapidly losing value.
US Retail Sales
Today, the situation is a bit different since the UK statistical figures may disappoint market participants. The UK inflation may surge to 3.7% from 3.1%. Notably, the Bank of England has already unveiled its plans about the parameters of the monetary policy tightening. Thus, a further rise in inflation will be considered a negative factor. The regulator will hardly revise its plans every month. In other words, the pound sterling may start losing value at the beginning of the day.
UK Inflation Rate
At the same time, the US macroeconomic reports are likely to encourage market participants.
In particular, the US housing starts may advance by 2.3%, while building permits may increase by 4.5%. However, today's reports are not as important as retail sales or industrial production ones. That is why the US dollar is expected to show a modest rise.
US Housing Starts
The pound/dollar pair has been trading sideways for more than 60 hours, ignoring its European counterpart. This may lead to an accumulation process, thus causing high speculative activity.
The levels of 1.3400 and 1.3450 are acting as the main levels, where the volume of positions may decline.
On the one-hour chart, the RSI indicator is moving along the 50 line, thus proving stagnation.
On the daily chart, we see an insignificant rebound from the support level of 1.3352. The main market trend remains bearish.
Outlook
If the price fixes below 1.3400 on the four-hour chart, it is likely to resume falling. In this case, the pair may break the local low of 1.3352.
In terms of the complex indicator analysis, we see that technical indicators are providing mixed signals on the one-minute and daily charts due to the price stagnation. On the daily chart, we see sell opportunities amid a downward movement.