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Over the last trading day, the pound / dollar currency pair showed volatility, close to the average daily 71 points, as a result of having the expected pullback. From the point of view of technical analysis, we see a correctional movement from the pivot point of 1.2433, the minimum of the current year, where the quotation reached the value of 1.2569, the area of the cluster on July 3-4. After that, we see a slight overheating of long positions and, as a fact, an expected rollback to the previously passed level of 1.2500. As it was written in the previous review, after a spike in prices, traders set at partial profit taking, in case there is a rollback with the restoration of quotes.
The news background of the previous day focused on the second speech by Jerome Powell in the US Congress, where the Fed chief did not say anything new, highlighting only: "The most important thing for me is the uncertainties surrounding the growth of the global economy and trade, which put pressure on the outlook." The life-giving topic of the refinancing rate was not raised during the two-day meeting, but market participants clearly heard hints of a possible reduction, and this all looks like some kind of preparation for easing monetary policy, in particular, lowering the rate. Returning to the news flow, we see that yesterday, data on inflation in the United States came out, where, as expected, they saw a slowdown from 1.8% to 1.6%. Data on the number of initial claims for unemployment benefits fell from 222K to 209K.
Finally, news from England was released. According to the Bank of England, a threat to the British economy is a reduction in foreign investment in UK assets because of Brexit. Foreign investors refuse to invest in commercial real estate and corporate lending in Britain, which indicates that the country is losing its attractiveness in terms of investment against the background of the upcoming exit from the EU, as the famous publication the Wall Street Journal writes. Previously, we have repeatedly raised the topic that the English currency begins and the overcoming of the marks of 2017-2016 is not far off.
Today, in terms of the economic calendar, we have data on producer prices in the United States, where they expect a decline from 1.8% to 1.6%.
The upcoming trading week in terms of the economic calendar is quite moderate, the week starts with a lull, but from Tuesday we already have a stream of news. Do not forget that the finish of the election race in Britain is nearing, and soon we will officially hear about the victory of Boris Johnson. The circus regarding the divorce process of Brexit will be resumed.
The most interesting events displayed below --->
Tuesday, July 16
United Kingdom 8:30 UTC+00. - Change in the number of applications for unemployment benefits (June): Prev. 23.2K ---> Forecast 22.9K
United Kingdom 8:30 UTC+00. - Average wage with bonuses (May): Prev. 3.1% ---> Forecast 3.0%
United States 12:30 UTC+00 - Retail sales
United States 13:15 UTC+00 - Industrial production
Wednesday, July 17
United Kingdom 8:30 UTC+00. - Consumer Price Index (CPI) (y / y) (June): Prev. 2.0%
United States 12:30 UTC+00 - Number of building permits issued (June): Prev. 1.299M ---> Forecast 1,300M
United States 12:30 UTC+00 - The volume of construction of new homes (June): Prev. 1.269M ---> Forecast of 1.265M
Thursday, July 18
United Kingdom 8:30 UTC+00. - Retail Sales (YoY) (June): Prev. 2.3% ---> Forecast 2.7%
These are preliminary and subject to change.
Further development
Analyzing the current trading chart, we see that a temporary bump with a pivot point of 1.2500 has been confirmed, and now the quotation continues to fluctuate, having borders of 1.2500 / 1.2570. It is likely to assume that the movement in this framework will still persist, where traders carefully analyze the existing framework for breakdown when paving for further deals.
Based on the available information, it is possible to decompose a number of variations, let's specify them:
- Positions to buy, as written in the previous review, traders were still on the value of 1.2480, and yesterday, they made a profit. Further operations are considered in the case of price fixing higher than 1.2570.
- Sell positions are considered in case of price fixing lower than 1.2500.
Indicator Analysis
Analyzing a different sector of timeframes (TF), we see that indicators in the short term changed their interest to neutral due to ambiguous bumpiness. Intraday perspective retains an upward interest against the background of the correction. The medium-term outlook keeps the downward interest against the background of a general decline since the beginning of the month.
Weekly volatility / Measurement of volatility: Month; Quarter; Year
Measurement of volatility reflects the average daily fluctuation, based on monthly / quarterly / year.
(July 12 was based on the time of publication of the article)
The current time volatility is 34 points. It is likely to assume that the volatility will be fixated within the framework of the daily average.
Key levels
Zones of resistance: 1.2620; 1.2770 **; 1.2880 (1.2865-1.2880) *; 1.2920 *; 1.3000 **; 1.3180 *; 1,3300.
Support areas: 1.2500; 1.2430 *; 1.2350 **; 1.2100 **; 1.2000.
* Periodic level
** Range Level
*** The article is based on the principle of conducting a transaction, with daily adjustment.
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