The focus of market participants today is the meeting of the Bank of England. The results of this meeting, which will be published at 11:00 (GMT), can greatly affect the dynamics and prospects of the pound. At least at 11:00 and 11:30 (GMT), when the speech of Bank of England Governor Andrew Bailey begins, we should expect a sharp increase in volatility in the pound quotes.
It is highly likely that the pound will also rise in the entire financial market as the Bank of England's monetary policy report will also be published concurrently, containing an assessment of economic prospects and inflation.
Meanwhile, the market is preparing for tomorrow's publication (at 12:30 GMT) of the US Department of Labor's report on the state of the US labor market for July.
This publication is of great importance for market participants: data on the state of the labor market (along with GDP and inflation) are key for the Fed in determining the parameters of the current monetary policy.
The US economy is expected to create 250,000 new jobs in July, wages continued to rise, and unemployment remained at 3.6%, the same as in June, May, April, and March, according to the forecast. These are the lowest levels of unemployment over the past few years, correlated with pre-pandemic levels.
In general, the figures can be called encouraging. The data shows continued improvement in the US labor market, and before the coronavirus, the US labor market remained strong, indicating the stability of the US economy.
In this regard, investors will also pay attention to the weekly data from the US labor market, which includes a report on the number of applications for unemployment benefits.
Initial and continuing claims are expected to remain at pre-pandemic lows, which is also positive for the dollar, indicating the stability of the US labor market.
Previous (weekly) figures for initial jobless claims:
256,000, 251,000, 244,000, 235,000, 231,000, 232,000, 202,000, 211,000
Previous (weekly) figures for continuing claims:
1.359 million, 1.384 million, 1.333 million, 1.372 million, 1.324 million, 1.331 million, 1.309 million, 1.309 million.
And yet, on the eve of tomorrow's publication of data from the US labor market, investors are reserved about the idea of buying the dollar: the DXY dollar index is falling again today after a sharp increase the day before against the backdrop of the Taiwan visit of US House Speaker Nancy Pelosi. The visit took place, the markets calmed down, and the dollar went down.
Weakening geopolitical risks was reflected in the growth of stock indices. In particular, the American broad market index S&P 500 (in the trading terminal it is reflected as CFD #SPX) yesterday broke through the strong resistance level of 4148.00 and today came close to the key long-term resistance level of 4185.00, which separates the bullish trend from the bearish one. A break of this resistance level will resume the multi-year upward trend in the S&P 500.