British pound currently is having a strong headwind to reduce the pound strengthen coming to the market in play. It just started and the strong headwind is the potential pause of the BOE rate hike coming in 2024 as the inflation CPI of 11% previously in 2022 by the UK CPI is currently only at 4.60%. Drop more than half.
The pound strength will reduce and not increase due to 2 strong headwind reason here.
1) the UK GDP for the past few quarters is hovering slightly below 0% and slightly higher than 0% also. No a very good economic condition and the pound will not be strengthen by economic factors.
2) The BOE funds rate interest is coming to a peak and will most likely not be raise higher base on the CPI and core PCE reading for UK. Euro central bank will be cutting rate soon due to very fast inflation drop but this reason does not come into play for UK core PCE reading.
There is only 24 days left in 2023 and if there is a drop in the pound strength then the next medium support level of 4 hours charts is at 120.17. The current reading for the pound index is 125.74.
We might reach this reading this year end or early next year in January 2024.
If the pound strengthen the max will go is at the 1-day resistance at 130.57. This is most likely not happening soon. Unless there is a very bad CPI and core PCE data for the next 3 months for UK. Still think this is high unlikely to happen due to the restrictive rate of the BOE funds rate at 5.25%.
If BOE cut rates next year in 2024 the pound strength index will most likely head to 1 day support level at 106.10 if no strong tailwind that will cause the Pound to strengthen.
When the pound in the near term reach 120.17, trader need to give time of 2 to 3 weeks to reassess the situation before deciding to sell or buy or hold.
make sure confirm news of the 4 following is there before deciding.
1) jobs report not sure if it is JOLTS like the USA.
2) UK monthly CPI
3) UK monthly PCE
4) BOE monthly meeting outcome.
The pound strength will reduce and not increase due to 2 strong headwind reason here.
1) the UK GDP for the past few quarters is hovering slightly below 0% and slightly higher than 0% also. No a very good economic condition and the pound will not be strengthen by economic factors.
2) The BOE funds rate interest is coming to a peak and will most likely not be raise higher base on the CPI and core PCE reading for UK. Euro central bank will be cutting rate soon due to very fast inflation drop but this reason does not come into play for UK core PCE reading.
There is only 24 days left in 2023 and if there is a drop in the pound strength then the next medium support level of 4 hours charts is at 120.17. The current reading for the pound index is 125.74.
We might reach this reading this year end or early next year in January 2024.
If the pound strengthen the max will go is at the 1-day resistance at 130.57. This is most likely not happening soon. Unless there is a very bad CPI and core PCE data for the next 3 months for UK. Still think this is high unlikely to happen due to the restrictive rate of the BOE funds rate at 5.25%.
If BOE cut rates next year in 2024 the pound strength index will most likely head to 1 day support level at 106.10 if no strong tailwind that will cause the Pound to strengthen.
When the pound in the near term reach 120.17, trader need to give time of 2 to 3 weeks to reassess the situation before deciding to sell or buy or hold.
make sure confirm news of the 4 following is there before deciding.
1) jobs report not sure if it is JOLTS like the USA.
2) UK monthly CPI
3) UK monthly PCE
4) BOE monthly meeting outcome.