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Pound tumbles as UK cost of living crisis casts doubt on BOE rate hikes


The window is certainly closing for the BOE to raise rates, as the UK economy came to a virtual standstill in May according to PMI data here. Rising inflationary pressures are weighing heavily on demand conditions and that is not helping to allay fears of an impending recession in the UK, one which the BOE says could only hit in 2023.

The pound rose from 1.2570 to 1.2485 against the dollar as markets scramble to revalue all of this. UK consumer inflation hit 9% in April and policymakers are warning of double-digit inflation to follow in the coming months, but we are already seeing the effects it is having on the economy.

Money markets had previously forecast five more rate hikes by the BOE for this year. That now amounts to four rate hikes after the release of the PMI data above.

The 100-hour moving average at 1.2477 will be key in the near term assist level

Assistance level

A trade support or support level represents a given price that acts as a temporary barrier for an asset. In particular, this level ensures that the price of an asset will not fall below or encounter difficulty in doing so. All assets can use supports, be it forex, stocks, commodities, etc. The support level for a given asset is created by buyers entering the market whenever the asset falls to a lower price. Basic support levels can be calculated and charted by identifying the lowest lows for a given time frame. This can happen over any period, be it daily, hourly, etc. A support line can be flat or skewed up or down from the overall price trend. Looking deeper, other technical indicators and charting techniques can be used to identify more advanced releases of support. Support levels differ from resistance, which illustrate the opposite direction of price movements. Understanding Support Levels When the price of an asset falls towards a defined support level, the asset can either hold at that level or fall further. In this case, additional supports must be identified to offset a breach or drop. Support levels for many assets can be created by limit orders or simply by the market action of traders and investors. Traders can rely on support levels to plan either entry or exit. points for trades, as well as developing more detailed trading strategies. For example, if the price action on a chart falls below a support level, this is considered an opportunity to buy or go short. Also, if this breakout of the support level occurs during an uptrend, it could possibly be a sign of reversal and strength.

A trade support or support level represents a given price that acts as a temporary barrier for an asset. In particular, this level ensures that the price of an asset will not fall below or encounter difficulty in doing so. All assets can use supports, be it forex, stocks, commodities, etc. The support level for a given asset is created by buyers entering the market whenever the asset falls to a lower price. Basic support levels can be calculated and charted by identifying the lowest lows for a given time frame. This can happen over any period, be it daily, hourly, etc. A support line can be flat or skewed up or down from the overall price trend. Looking deeper, other technical indicators and charting techniques can be used to identify more advanced releases of support. Support levels differ from resistance, which illustrate the opposite direction of price movements. Understanding Support Levels When the price of an asset falls towards a defined support level, the asset can either hold at that level or fall further. In this case, additional supports must be identified to offset a breach or drop. Support levels for many assets can be created by limit orders or simply by the market action of traders and investors. Traders can rely on support levels to plan either entry or exit. points for trades, as well as developing more detailed trading strategies. For example, if the price action on a chart falls below a support level, this is considered an opportunity to buy or go short. Also, if this breakout of the support level occurs during an uptrend, it could possibly be a sign of reversal and strength.
Read this term to watch for the moment in the cable. A drop below that could pave the way towards 1.2400 as markets try to digest what the BOE might do next in terms of policy steps later this year.

However, this is a good warning indicator for the ECB, as Europe also seems to be following the same path. And when the markets see a cause for any price revision, they can be quite violent. For now, this will not help sentiment for the pound.


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