Home Forex Markets Bullish GBP/USD!Inflation is too high, the Bank of England may have to raise interest rates more than expected

Bullish GBP/USD!Inflation is too high, the Bank of England may have to raise interest rates more than expected

by WOOWinvest
0 comment
Bullish GBP/USD!Inflation is too high, the Bank of England may have to raise interest rates more than expected

The growth rate of real wages in the UK fell year-on-year, and continued high inflation may stimulate the Bank of England to raise interest rates more than expected
On the technical front, GBP/USD is expected to continue to rise in the short term
GBP/USD bearish bias strengthens, according to IG Client Sentiment

GBP/USD Fundamental Outlook

On Tuesday (January 17), the British Office for National Statistics (ONS) data showed that the unemployment rate in the three months to November 2022 (September-November) was 3.7%, in line with expectations; Wage growth rose to 6.4 percent from 6.1 percent previously, close to a record high of 7 percent, though still lagging behind the cost of living.

The ONS said that in real terms (adjusted for inflation), real wage growth in September-November 2022 was down 2.6% year-on-year in September-November 2022, with a larger decline dating back to February-April 2009, when the year-on-year decline 4.5%. In addition, the growth rate of fixed wages also fell by 2.6% year-on-year, slightly lower than the record 3% in April-June 2022.

Click to download the GBP Q1 Outlook!🔥🔥🔥

Against the background of ultra-high inflation, rising wages and a strong labor market in the UK, the Bank of England will continue to raise interest rates in its interest rate decision next month, which is likely to exceed expectations. In addition, the latest UK inflation data to be released tomorrow (January 18) deserves attention.

Chart source: DailyFX

Sterling edged up after the jobs data, with markets starting to price in further that the BoE will need to take more action at its next meeting to contain persistent inflationary pressures; in terms of technical indicators, price action remains above 20-day, 50-day and 200-day moving averages , In addition, the crossing of the 50-day and 200-day moving averages has released a bullish signal, and the GBP/USD pair is expected to continue the rebound since January 6 in the short term. The bullish target may be around the December 14, 2022 high (1.2448).

GBP/USD daily chart

Bullish GBP/USD!Inflation is too high, the Bank of England may have to raise interest rates more than expected

Chart source: TradingView

IGCustomer Sentiment Index: GBP/USD

According to IG customer sentiment data, 50.02% of traders are net long, and the ratio of traders’ long to short positions is 1.00:1. The number of net long traders increased by 12.19% from yesterday and 14.43% from last week; while the number of net shorts decreased by 0.49% from yesterday and 15.57% from last week.

In general, crowd sentiment tends to act as a contrarian indicator, and current net longs mean that GBP/USD is likely to fall. The number of net-long traders has increased compared to yesterday and last week, which combined with the current and recent sentiment changes strengthens the GBP/USD short-term bearish bias.

(Written by Nick Cawley, translated by Chris Li)

Know yourself and know the enemy, how to use reverse indicators, to match and win by odds!🔥🔥🔥

The content on this web page is general market commentary only and may not constitute investment advice of any kind (tax, legal, accounting). This article does not constitute a direct investment invitation or recommendation for specific financial products. The content is for reference only. Readers should not rely on the information herein, nor should their actions or omissions be relied upon. We are not responsible for the results of any person’s actions or omissions based on this article. We make no warranties as to the accuracy of the content or suitability of the information provided. This article is not intended to be disseminated within the territory of the People’s Republic of China (excluding Hong Kong, Macau and Taiwan for that matter), except as permitted by the applicable laws of the People’s Republic of China.

Copyright statement: Unless it is for browsing the information on this website, or in accordance with the applicable laws or the terms and conditions, without our specific written permission, no one may copy, usurp, upload, link, or publicly demonstrate to a third party in any way , distribute or transmit any information or content on this website. For unauthorized reprinting of infringements, we reserve the right to further pursue the legal responsibility of the relevant actors. If you have business cooperation needs such as marketing, resource exchange, etc., please contact us.

element inside the element. This is probably not what you meant to do! Load your application’s JavaScript bundle inside the element instead.

You may also like

Leave a Comment

Our Mission is to help you make better trading decisions by providing actionable investing content, comprehensive tools, educational resources and assist you in making more money in the stock market.

Latest News


Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

@2022 – All Right Reserved. Designed and Developed by WOOW Invest

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy