The unemployment rate in the UK fell from 4.7% to 4.6%, which of course is an extremely positive factor. Moreover, it should have remained unchanged. But not only this could boast of the data on the labor market, which turned out to be significantly better than the wildest expectations. So, employment increased by 183,000, instead of 150,000. The growth rate of average wages, which should have slowed from 7.3% to 6.7%, fell to 6.8%. Of course, it can be argued that the reduction in wages is just a negative moment, but it is necessary to take into account the decrease in the unemployment rate. Parallel reduction of both indicators is completely normal. And they predicted a slowdown in wage growth with a stable unemployment rate. And as a result, unemployment has decreased, and wage growth has slowed down somewhat less. In general, the data on the British labor market can be described as simply excellent. So it is not surprising that the pound continued to gradually grow.
Unemployment rate (UK):
But all the most interesting things happened after the opening of the US trading session. As soon as it became known that the inflation rate in the United States fell from 5.4% to 5.3%, the pound suddenly rushed up. And it looked quite strange, given that the slowdown in consumer price growth, in the current situation, is an exceptionally positive moment. After all, high inflation poses the greatest threat to the emerging economic recovery. But it quickly became clear that all this was nothing but banal speculation, and in just half an hour the growth was replaced by a rapid fall of the pound. So everything finally fell into place.
Inflation (United States):
But in the UK, inflation did not decrease, but sharply jumped from 2.0% to 3.2%. We were already waiting for fairly strong growth, but only up to 2.9%. So the United Kingdom, albeit with some delay, faced the same problem as the United States with the euro area. With the rapid growth of consumer prices. However, as yesterday, the market behaved somewhat strangely, and instead of a succeeding collapse from the pound, its attempts at growth are observed. Of course, we can assume that in the end everything will happen exactly the same as yesterday, and pretty soon the pound will rush down. But it is quite possible that events will develop somewhat differently. Yesterday's decline in the pound turned out to be extremely impressive, and much more ambitious than for other currencies. It is quite possible that market participants have predicted an increase in inflation in the UK in advance, and there is nowhere for the pound to continue to decline. Nevertheless, the probability of further weakening of the pound is still high.
Data on industrial production will be published in the United States, the growth rate of which should slow down from 6.6% to 5.0%. However, these are annual data, which, judging by the numbers, still feel the imprint of the low base effect. So they are not really informative. Whereas on a monthly basis, the industry should grow by 0.5%. Nevertheless, the multidirectional nature of annual and monthly data will counterbalance each other, and the market is likely to remain at current levels. And the data on industrial production themselves are rather of a secondary nature, and have a rather weak impact on the market.
Industrial Manufacturing (United States):
In the course of recent speculation, the quote showed high volatility, as a result of which the local high of September 3 was broken for a while. The bulls' joy did not last long, there was a sharp reduction in the volume of long positions in the 1.3880/1.3890 area. This led to a rapid downward movement towards the level of 1.3800.
With all the fluctuation present, the quote is still stuck between the reference levels 1.3800/1.3880.
Expectations and prospects:
In this situation, special attention is paid to the value of 1.3800, as keeping the price below it in a four-hour period may well prolong the downward cycle. An alternative scenario will become relevant in case the price rebounds from the level of 1.3800, this will likely lead to a subsequent sideways range.
Comprehensive indicator analysis gives a buy signal based on the short-term period due to the price rebound from the level of 1.3800. Technical instruments on the intraday period are oriented towards selling due to the downward cycle in the period of the previous day.