Economists had expected the UK inflation to slacken to 10.3% from 10.5%. In fact, it dropped to 10.1%. Although inflation is still very high, its considerable slowdown points to the fact that the BOE may slacken the interest rate hike in the next few months. It may even decide to stop the monetary policy tightening and keep the key rate unchanged. There is no wonder that the pound sterling started losing value just after the publication of the report.
UK Inflation
During the US trade, the pound sterling continued falling, whereas economists had expected a rise. The growth in US retail sales should have slackened to 4.5% from 6.0%, which is enough to cause a depreciation of the US dollar. What is more, the previous data was downwardly revised to 5.9%. However, the real data showed an increase of 6.4%. Thus, the greenback's appreciation was quite expectable.
US Retail Sales
Nevertheless, there are attempts to cause a bounce of the US dollar, which is extremely overbought. The US unemployment claims may support the trend, which will correct the imbalance in the market. The number of first-time claims should increase by 2K, whereas the number of continuing claims may rise by 7K. Although the change is insignificant, it is enough to spur a bounce amid the overbought conditions. This will become possible if the real data meets the forecast instead of exceeding it.
US Continuing Claims
The pound/dollar pair has launched a downtrend. As a result, it rapidly dropped to the psychological level of 1.2000. Notably, traders fought for this level several times. This time, it also affected traders, thus leading to a drop in the volume of short positions.
On the four-hour chart, the RSI technical indicator downwardly crossed the midline 50, thus pointing to a rise in the volume of short positions. When the price approached 1.2000, the RSI indicator was near the oversold area.
In the same time frame, the Alligator's MAs are headed downwards. However, the signal is not stable due to numerous intersections between the lines.
Outlook
Under the current conditions, the area of 1.2000 is still exerting pressure on short orders. As a result, we may see stagnation or a rebound. If the price consolidates above 1.2080, traders may return to long positions, thus causing a partial recovery.
The downward scenario will become possible if the price settles below 1.1950 on the four-hour chart.
In terms of the complex indicator analysis, we see that in the short-term period, indicators are reflecting the existing rebound. In the intraday period, the indicators are providing a delayed signal. They are corresponding to the recent downward impulse.