Last week’s slightly positive GDP data from the UK, with the preliminary quarterly figure 0.1% against expectations for nil or a slight contraction, have boosted the pound in many of its pairs. The yen has lost more than a third of its value against the pound since early 2020, and with dollar-yen around the psychological area of ¥145 there is speculation that the Bank of Japan might intervene again to try to stabilise the situation.
On the chart, there’s a classic double top which, together with very heavy buying saturation, would usually make entry to buy here extremely risky. Based on the reaction to 27 July’s down candle, it seems that buying pressure remains high, though. The usual approach by buyers in this situation would be to wait for a retracement – possibly as a result of divergent data – then enter lower to decrease risk and increase potential reward.
British inflation would probably be a better place to look for that than the job report since a much bigger change is expected from the former. Usually, inflation also has a more direct impact on monetary policy than employment, although earnings are in focus this week for hints on whether further inflationary pressure might be ahead.
On the chart, there’s a classic double top which, together with very heavy buying saturation, would usually make entry to buy here extremely risky. Based on the reaction to 27 July’s down candle, it seems that buying pressure remains high, though. The usual approach by buyers in this situation would be to wait for a retracement – possibly as a result of divergent data – then enter lower to decrease risk and increase potential reward.
British inflation would probably be a better place to look for that than the job report since a much bigger change is expected from the former. Usually, inflation also has a more direct impact on monetary policy than employment, although earnings are in focus this week for hints on whether further inflationary pressure might be ahead.