Apart from American inflation, surprisingly positive British GDP data on Friday 11 August have boosted the pound in many of its pairs. Nevertheless, the Bank of England remains 0.25% behind the Fed on rates despite British inflation at 7.9% being more than double the USA’s. According to recent comments, the Bank of England now expects the UK to avoid a recession. Overall, there isn’t a clear fundamental narrative for cable in either direction at the moment.
That makes the downward movement since the middle of last month understandable as a technical retracement rather than the beginning of a new downtrend, for the moment at least. Volume for cable has remained relatively high this summer, while 3 August’s strong bounce with a dragonfly doji from the 100 SMA would usually suggest a fairly strong buy signal. Acting on that would require patience, but it’s also not certain how the pound will react to the critical job report and inflation data on 15 and 16 August.
That makes the downward movement since the middle of last month understandable as a technical retracement rather than the beginning of a new downtrend, for the moment at least. Volume for cable has remained relatively high this summer, while 3 August’s strong bounce with a dragonfly doji from the 100 SMA would usually suggest a fairly strong buy signal. Acting on that would require patience, but it’s also not certain how the pound will react to the critical job report and inflation data on 15 and 16 August.