16.08.201709:20 Forex Analysis & Reviews: Unfounded hopes and new fears

As it often happens, the forecasts do not coincide with reality, and this is exactly what happened to the pound. Inflation has not grown, as it remained at the same level. Accordingly, all hopes that the supporters of the tightening of monetary policy will prevail in the Bank of England has turned into dust. The pound started to lose positions rapidly.

Data from the United States only strengthened this trend, pulling the pound and the single European currency. The growth rate of retail sales accelerated from 3.4% to 4.2%, which was better than forecasts. Investors are encouraged by the fact that the growth in consumer activity blocked the slowdown in inflation in a few months, which raises the likelihood of further hiking the Fed's interest rate.

Today, data in the UK will be released regarding the labor market, and if the jobless rate remains unchanged, then the number of applications for unemployment benefits could increase from 6.0 thousand to 7.2 thousand. Thus, the probability of unemployment growth in the near future is high, and it is not the best way to affect the pound. After all, with the growth in unemployment, it is unlikely that the Bank of England will decide to hike the interest rate. In the euro area, preliminary data on GDP for the second quarter was released, which can confirm the acceleration of economic growth. Therefore, a single European currency has a chance to improve its position somewhat.

In the US, it is expected that there will be a reduction in the number of issued construction permits from 1,254 thousand to 1,250 thousand. At the same time, the number of construction projects could increase from 1,215 thousand to 1,222 thousand. However, the main event for the day will be the publication of the text of the final minutes of the meeting of the Federal Reserve Open Market Committee operations. Against the backdrop of slowing inflation, it is unlikely that we will see in the text signs of a time frame for hiking the interest rate. There are fears that the text of the protocol will reflect the Committee's concerns about slowing inflation. This will signal that if the rate is raised again this year, it will only happen in December.

If all expectations do coincide, the euro/dollar pair has all the chances to increase to 1,1805.

The pound/dollar pair could initially drop to 1.2825. However, after the release of the minutes, growth will begin. Given that the pound has been excessively oversold, growth will be significant. The benchmark is 1.2935.