On Tuesday morning data from the UK market were published:
→ base wage rose at a record pace in the second quarter. It was 7.8% higher than a year earlier, representing the highest annual growth rate since 2001.
→ at the same time, the number of unemployed also increased. In July, 29k applications for unemployment benefits were submitted (expected – 19.2).
The first reaction of the pound is growth. It is possible that market participants have increased fears that wage growth will give the Bank of England more grounds for a sharper increase in interest rates. At the same time, the bullish momentum faded quickly, in line with the bearish momentum that has dominated the GBP/USD market since mid-July (as shown by the black line) amid the formation of the SHS pattern.
However, the situation may change.
As the daily chart shows, the GBP/USD rate dropped to the border of the ascending channel, which is valid in 2023, and seems to have found support there — as a candle with a long lower shadow was formed yesterday. Buyers quickly snapped up the fall, showing strength of demand around the 1.266 support line, which is also being strengthened by the 100-day moving average.
The probability of a rate hike in September by the Bank of England by 0.25 points is 99%, according to Reuters. And the closer the decision is, the stronger the demand can become, which can lead to a bullish reversal from the block of supports and a breakdown of the black line.
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