05.10.202207:57 Forex Analysis & Reviews: Hot forecast for GBP/USD on 05/10/2022

The growth rate of producer prices in the euro area accelerated from 38.0% to 43.3%, which was the reason for the euro's growth, which pulled the pound along with it. After all, such a strong increase in producer prices leaves no doubt about the further growth of inflation, which is already at a record high level. So the European Central Bank now has no choice but to actively raise interest rates. And this is amid the expected slowdown in the rate of growth of the refinancing rate of the Federal Reserve. Moreover, it is expected that next year the US central bank will not only stop raising interest rates, but will even have time to make their first reduction. But the European Central Bank will almost certainly raise interest rates throughout the next year. In other words, there is a prospect that in a year, the refinancing rate in Europe will be higher than in the United States. This is what pushes the single currency up. And it pulls other currencies along with it.

The data on employment in the United States will be published today, which is unlikely to affect anything. Employment is expected to grow by 135,000, which roughly corresponds to the results of the previous month, when employment increased by 132,000. And the employment growth itself is taking place on a scale that is more consistent with the stability of the labor market. That is, they cannot influence the unemployment rate in any way. In other words, it is simply impossible to draw any conclusions based on such results. So the market is likely to consolidate in the region of the achieved values. Some shifts are possible only if the actual data differ significantly from the forecasts.

Employment change (United States):

The GBPUSD currency pair, during a rapid corrective movement from the local low of the downward trend, has overcome the resistance level of 1.1410. The move indicates a strong desire for speculators to continue rising, despite the fact that the pound has already appreciated by more than 1,100 points in a period of seven trading days.

The technical instrument RSI H4 touched the overbought zone, which corresponds to the scale of the recent strengthening of the pound. RSI D1 crossed the middle line 50 upwards, this move indicates a slowdown in the downward trend.

The moving lines on the Alligator H4 indicator are directed upwards, which corresponds to a corrective move. Alligator D1 has a primary signal of a change in market sentiment. The green moving line has crossed the red MA line upwards.

Expectations and prospects

In this situation, there is an overheating of long positions on the pound, which fully allows for a scenario of stagnation or rollback. At the same time, there is still speculative interest on the market, which allows prolongation of the correction if the quote overcomes 1.1500. Under this scenario, the pound's subsequent growth towards the level of 1.1750 is possible.

Complex indicator analysis in the short term has a variable signal due to the stage of stagnation/rollback within the level of 1.1410. Indicators in the intraday and medium term are still focused on the downward trend.