Pound/dollar: last week's results and forecast for the coming period
The consolidation of quotations is visible in the area of 1.3800. The market growth trend continues – the upward trend of the currency pair is supported. Reliable support is at 1.3720. The US dollar was under pressure in the second half of the week. The US Federal Reserve mentioned in the minutes of its last meeting a reduction in asset purchases in November. An improvement in sentiment on global markets could also play a role, which provoked demand for other world currencies.
The latest news signals say that the Bank of England may raise interest rates to curb inflation. Consumption is growing year-on-year, the latest releases of industrial production and manufacturing data cause optimism among investors. The indicators continue the growth trend at a moderate pace, thereby giving a signal to the regulator to change its conservative policy.
The yield on 10-year UK bonds is close to the October maximum, and is now at 1.1470%. Meanwhile, the dynamics of the yield of US Treasuries keeps the dollar from further decline, the yield of 10-year US government bonds rose above 1.6%.
Meanwhile, UK inflation strengthens hopes for a recovery in the country's economy. On Wednesday, the kingdom's currency was strong. The National Statistical Office (ONS) of the country published UK consumer prices for September at the level of 3.1%. There is an increase compared to the same month last year. Inflation slowed down compared to August's 3.2%. Analysts surveyed by Trading Economics, on average, expected consumer prices to rise by 3.2% in September. These figures have not changed expectations that the Bank of England will become the first major central bank in the world to raise rates.
Friday's news strengthened traders' expectations. The UK has published the index of business activity in the manufacturing sector (PMI) and the index of business activity (PMI) in the services sector. The data came out better than the forecast and better than the previous value.
Amid the growth of the UK economy, global market signals indicate a multitude of problems - from the spread of the COVID-19 delta strain to disruptions in global supply chains. The crisis in the real estate sector in China, related to the debt problems of one of the country's largest developers, China Evergrande Group, adds to the concern.