UK economy recovers slightly

According to recent Bank of England data, the UK economy has slightly shown more inflationary momentum than projected, and wages are expanding faster than expected.

According to the S&P Global/CIPS UK survey released on Wednesday, the monthly manufacturing PMI contracted last month at the slowest rate since July, and 60% of producers expected production orders to increase in the next 12 months after previous industrial orders contracted for the ninth consecutive month, reflecting the impact of the cost of living crisis and weak demand from overseas customers.

In addition, the service sector index has unexpectedly strengthened over the last month, easing fears of a deep and extended recession. The latest UK services PMI data is due for release on Friday.

British house prices declined 0.5% last month for the sixth consecutive month, indicating a slowdown in the property market following high inflation and rising borrowing costs. In addition, according to figures issued by the Bank of England on Wednesday, the number of mortgage applications fell to the lowest in January since 2009, with total home loan approvals falling to 39,637 from 40,540 in December.

However, according to a Reuters poll published on Tuesday, house prices are predicted to fall only 2.4% this year due to a rebounding job market and a little gain in income, which is expected to assist in supporting housing purchasing power, especially if interest rates calm down in the coming months.

Consumer credit has grown by leaps and bounds, totaling 1.6 billion pounds ($1.9 billion) for the month, more than doubling Reuters' prediction.

According to a Bank of England study, plans in the UK business sector have been changed and the price increase has been postponed in February, but there are still strong intentions to boost prices and wages. Many business sectors intend to raise pay by 5.7% next year, with the scale of expected salary and price increases remaining roughly double the pre-COVID-19 average, when inflation was still close to the target range.

Various organizations expect consumer price inflation to fall to 5.9% in one year and 3.4% in the next three years, contrary to the Bank of England's forecast last month that inflation would fall below the 2% target in the second half of next year. As a result, it may influence future BoE interest rate policy considerations.

After the Monetary Policy Committee (MPC) has raised interest rates from 3.5% to 4%, the market anticipates a peak of 4.5% in June and 4.75% in the last quarters of the year. Prior to this, the Bank of England indicated in February that it was nearing the conclusion of its policy of rising interest rates and attempting to reduce inflation, which is now at 10.1%, to the 2% objective.

The dollar pair continued to gain momentum on Thursday as US labor market data remained strong, with initial jobless claims falling to 190,000 from 192,000 the previous week, and other economic data showing labor costs rising, indicating that the Federal Reserve will continue to raise interest rates to control inflation.

Data for Technical Analysis (5H) CFD GBP/USD

Resistance : 1.1958, 1.1965, 1.1978

Support : 1.1932, 1.1925, 1.1912                  

5H Outlook

1H Outlook    

Source: Investing.com                              

Buy/Long 1 If the support at the price range 1.1922 - 1.1932 is touched, but the support at 1.1932 cannot be broken, the TP may be set around 1.1965 and the SL around 1.1918, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1.1958 - 1.1968, TP may be set around 1.1978 and SL around 1.1930, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1.1958 - 1.1968 is touched, but the resistance 1.1958 cannot be broken, the TP may be set around 1.1932 and the SL around 1.1972, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1.1922 - 1.1932, TP may be set around 1.1912 and SL around 1.1960, or up to the risk appetite.       

Pivot Points Mar 03, 2023 03:34AM GMT

Sources: Investing 1, Investing 2